Jones Lang LaSalle
CenterPoint at 8A, a New Jersey project that is part of the REIT's 15 million square foot portfolio.
CHI 12 12 05
CENTERPOINT GOES PRIVATE
Peter Slatin
In a deal that will give longtime shareholders of CenterPoint Properties Trust a 13% boost over its average trading price for the past 90 days, the Chicago industrial REIT announced after trading December 7 that it has agreed to be acquired by an institutional investor for $50 a share in a cash transaction. By the close of trading Friday, CNT shares were selling for $49.60, up from $45.83 at the close of trading Wednesday.
CenterPoint, the largest industrial landlord in the country's historically industrial Midwestern hub, is being acquired by CalEast Industrial Investors, a venture whose members include the California Public Employees Reitirement System (CalPERS) and LaSalle Investment Management, the institutional asset management division of global real estate services firm Jones Lang LaSalle (JLL). LaSalle is CalEast's managing member. JLL, which operates commercial brokerage, management, research and advisory services, posted modest gains since the announcement.
The deal's value is approximately $3.4 billion, including about $900 million in assumed debt and preferred equity.
"It's a very rich price," says Louis Conforit of Greenwood Group LLC, a Chicago hedge fund manager, noting that the stock was trading in the high 20’s in the first quarter of 2003. "The appetite of institutional investors, especially public pension funds and their advisors, for large portfolios continues to be insatiable even in the face of record low cap rates.
"CNT owns and manages some 15 million square feet of industrial and flex space, mostly in the Chcago area, but with some holdings in Canada and Mexico.
Rumors of a possible takeout began swirling in mid-October, but serious skepticism about the valule of CNT's assets dampened speculation. REIT buy-siders Green Street Advisors pegged CenterPoint's warranted share price at $39 at the time, and expressed skepticism that a deal at the price announced this week could meet the approval it has; Deutsche Bank downgraded the stock just before Thanksgiving. The sale price, a dollar above where CNT traded over a year ago, but below what some shareholders believe the company is worth, reflects the tug-of-war in real estate between go-go buyers and developers and investors concerned that property (and share) prices may be peaking. Institittions such as CalPERS clearly see values hidden in REITs in two important ways: asset pricing ,and development pipelines (in which CNT is particularly strong). Profit margins from development, however, have been steadily eroding due to rising construction costs, and asset prices appear to be stabilizing.
Green Street analyst Jim Sullivan, who tracks CNT, is wary of the deal. "Calpers is paying about $900 miillion over and above the value of the real estate for the management team," he told Forbes.com. "Justifying that price requires a tremendous amount of future value creation from superior acquisitions and development. CNT is a great team, perhaps the best in the business. But $900 million?" Whether that great team hangs together following their big payday is another key issue for Sullivan, as is how those who do stay respond to their new institutional environment. While it's a "great deal for CNT today," says Sullivan, "We should know in two to three years how CalPERS pensioners fared.
"The deal is the sixth REIT privatization announced this year. Others include AMLI Residential Properties Trust, which is being acquired by a Morgan Stanley real estate fund; Gables Residential Trust, being acquired by ING Clarion; and Prime Group Realty Trust, bought out in July for $889 million by LIghtstone Group and Conforti's Greenwood Group.
CenterPoint at 8A, a New Jersey project that is part of the REIT's 15 million square foot portfolio.
CHI 12 12 05
CENTERPOINT GOES PRIVATE
Peter Slatin
In a deal that will give longtime shareholders of CenterPoint Properties Trust a 13% boost over its average trading price for the past 90 days, the Chicago industrial REIT announced after trading December 7 that it has agreed to be acquired by an institutional investor for $50 a share in a cash transaction. By the close of trading Friday, CNT shares were selling for $49.60, up from $45.83 at the close of trading Wednesday.
CenterPoint, the largest industrial landlord in the country's historically industrial Midwestern hub, is being acquired by CalEast Industrial Investors, a venture whose members include the California Public Employees Reitirement System (CalPERS) and LaSalle Investment Management, the institutional asset management division of global real estate services firm Jones Lang LaSalle (JLL). LaSalle is CalEast's managing member. JLL, which operates commercial brokerage, management, research and advisory services, posted modest gains since the announcement.
The deal's value is approximately $3.4 billion, including about $900 million in assumed debt and preferred equity.
"It's a very rich price," says Louis Conforit of Greenwood Group LLC, a Chicago hedge fund manager, noting that the stock was trading in the high 20’s in the first quarter of 2003. "The appetite of institutional investors, especially public pension funds and their advisors, for large portfolios continues to be insatiable even in the face of record low cap rates.
"CNT owns and manages some 15 million square feet of industrial and flex space, mostly in the Chcago area, but with some holdings in Canada and Mexico.
Rumors of a possible takeout began swirling in mid-October, but serious skepticism about the valule of CNT's assets dampened speculation. REIT buy-siders Green Street Advisors pegged CenterPoint's warranted share price at $39 at the time, and expressed skepticism that a deal at the price announced this week could meet the approval it has; Deutsche Bank downgraded the stock just before Thanksgiving. The sale price, a dollar above where CNT traded over a year ago, but below what some shareholders believe the company is worth, reflects the tug-of-war in real estate between go-go buyers and developers and investors concerned that property (and share) prices may be peaking. Institittions such as CalPERS clearly see values hidden in REITs in two important ways: asset pricing ,and development pipelines (in which CNT is particularly strong). Profit margins from development, however, have been steadily eroding due to rising construction costs, and asset prices appear to be stabilizing.
Green Street analyst Jim Sullivan, who tracks CNT, is wary of the deal. "Calpers is paying about $900 miillion over and above the value of the real estate for the management team," he told Forbes.com. "Justifying that price requires a tremendous amount of future value creation from superior acquisitions and development. CNT is a great team, perhaps the best in the business. But $900 million?" Whether that great team hangs together following their big payday is another key issue for Sullivan, as is how those who do stay respond to their new institutional environment. While it's a "great deal for CNT today," says Sullivan, "We should know in two to three years how CalPERS pensioners fared.
"The deal is the sixth REIT privatization announced this year. Others include AMLI Residential Properties Trust, which is being acquired by a Morgan Stanley real estate fund; Gables Residential Trust, being acquired by ING Clarion; and Prime Group Realty Trust, bought out in July for $889 million by LIghtstone Group and Conforti's Greenwood Group.
posted by Jones Lang LaSalle NJ News Blog at 5:09 PM
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