(Ian Ritter, national online editor for GlobeSt.com/RETAIL, supplied additional reporting for this story.)
BOSTON-Centro Watt, an Australian and US joint venture, has agreed to buy strip-mall owner Heritage Property Investment Trust for $3.2 billion including debt. Centro Properties Group, a publicly traded Australian company, and privately held Watt Commercial Properties of Los Angeles is paying $36.15 a share, a 3.3% premium on Friday's closing share price on the New York Stock Exchange.
In a statement, Heritage officials note that, including debt, the sale value is about $3.2 billion. Heritage owns 171 shopping centers in 30 states and focuses on grocer-anchored shopping centers.Heritage's board of directors unanimously approved the deal and has recommended the approval of the transaction by Heritage's stockholders. A special stockholder meeting will be held to vote.
"In recognizing the underlying value of the company's real estate portfolio, the transaction accomplishes Heritage's ultimate objective as a public company, which is to maximize stockholder value," said Thomas C. Prendergast, Heritage's chairman, president and CEO, in the statement.
Rumors of Heritage trading hands have circulated for months. Reportedly the Lakewood, NJ-based Lightstone Group was in talks to acquire Heritage, until it deemed the firm overvalued. Other potential Heritage suitors were reportedly Ramco-Gershenson Properties Trust, headquartered in Farmington Hills, MI, and Schottenstein Real Estate Group, headquartered in Columbus, OH.
Subject to completion of the Heritage buy, Centro also plans to spin off a new $2.4-billion fund for security holders. The Centro Wholesale Fund will comprise 33 high-quality Australian shopping center interests currently owned by Centro. Centro officials explains that stabilized core assets from the Heritage portfolio will provide a pipeline for Centro's unlisted funds through the creation of two or more Centro syndicates with assets of $2.5 billion and a new Centro International Wholesale Fund.
Centro Watt has been active in the US retail market in recent years. Earlier this year the company's management, along with a joint-venture partner, agreed to buy eight malls from the Westfield Group for $550 million. Last year it bought the 93-center Kramont Realty Trust for $610 million. The Heritage deal makes Centro Watt one of the largest US retail-property owners.
Venable LLP was Maryland counsel in the transaction. Latham & Watkins was legal counsel for Pan Pacific, while Houlihan Lokey Howard & Zukin served as a fairness opinion provider to Pan Pacific. Wachtell, Lipton, Rosen & Katz and Greenburg Traurig served as legal counsel for Kimco.
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