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IPO for giant retail REIT may be biggest since Simon

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The initial public offering of Brixmor Property Group, the second-largest U.S. shopping center landlord, may be the biggest for a retail real estate investment trust since Simon Property Group Inc.’s IPO 20 years ago.

The sale of shares in New York-based Brixmor, a Blackstone Group LP unit, probably “will raise $700 million or more,” according to Renaissance Capital LLC, a Greenwich, Connecticut-based research firm. That would be the largest IPO by a shopping-focused REIT since Simon’s $840 million share sale in 1993, data from the National Association of Real Estate Investment Trusts show.

Brixmor yesterday made its first filing to go public, with pricing yet to be announced. New York-based Blackstone is taking advantage of a rally in shares of REITs that own and operate shopping centers. The Bloomberg REIT Shopping Center index is up about 11 percent from a low on June 20 after falling from a five-year high in May amid concern that rising interest rates would increase landlords’ costs.

Simon and Brixmor operate in different sectors of the retail REIT industry. Brixmor owns mainly grocery store-anchored, open-air centers, while Indianapolis-based Simon owns mainly enclosed malls and upscale outlets.

Brixmor owns 522 shopping centers with 87 million square feet of space. The assets that form Brixmor’s core were acquired in Blackstone’s $9 billion purchase of U.S. shopping centers from Australia’s Centro Properties Group in 2011.

Local properties in the Brixmor portfolio include Speedway Super Center, Westlane Shopping Center, Marwood Plaza and Meridian Village Plaza in Carmel.

Brixmor is second to Kimco Realty Corp. among U.S. shopping-center landlords by number of properties. Peter Rose, a Blackstone spokesman, declined to comment on the planned Brixmor stock sale.

Simon, the country’s biggest owner of shopping malls, was the fifth-biggest IPO of a property trust, according to the REIT association. There have been eight REIT IPOs of more than $700 million, the trade group said.

Brixmor is the third-biggest real estate asset held by Blackstone, which has said it plans to sell large property holdings over the next 12 to 18 months as property values rebound from the financial crisis and some funds approach the end of their term. The company reiterated that guidance in its second-quarter earnings conference call yesterday.

“Realizations in real estate continue to ramp up,” Blackstone President Tony James said on the call.

The firm has said it’s planning an IPO for the Hilton Worldwide Inc. hotel chain, and sales of office buildings acquired in the $39 billion purchase of Equity Office Properties Trust in 2007, the firm’s two biggest property holdings.

The firm sold $2.1 billion of real estate assets last quarter, including shares of General Growth Properties Inc., the largest U.S. mall landlord after Simon, James said.

Blackstone, the world’s biggest manager of alternative investments to stocks and bonds, hasn’t said whether it would sell any shares in the Brixmor IPO. It said it plans to hold a majority stake in the company after the sale.

The shares will trade under the symbol BRX. Brixmor will use the proceeds from the offering primarily to repay debt. The company obtained a $2.75 billion credit facility from a group of banks on July 16, according to the filing. Revenue rose 2.3 percent in the first quarter from a year earlier to $287.1 million, Brixmor said in the filing. The company’s net loss narrowed to $19.5 million from $37.9 million.

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  • Shopping Center
    Why don't they buy out Washington Square and put some decent stores back in there. I've got news for everybody. East siders do have money to spent and no close, convenient place to spent it. Give us some upscale shops. Why do I have to drive to Castleton or Greenwood? There isn't anything out here and that's ignoring 1/4th of the city of Indianapolis.

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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