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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. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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