Corporate Mergers Shopping center REITs Kranzco Realty Trust of Conshohocken, Pa., and CV Reit of West Palm Beach, Fla., recently signed a merger agreement and reorganization plan that will combine 84 community shopping centers valued at $800 million. The umbrella partnership real estate investment trust (UPREIT) will be called Kramont Realty Trust, based in Plymouth Meeting, Pa.
CV Reit's president and CEO, Louis P. Meshon Sr., will assume the same titles at the new company. Kranzco CEO Norman M. Kranzdorf will serve as chairman of the board. CV Reit will hold the majority of board seats.
Under terms of the merger agreement, shareholders will receive one share of Kramont Realty Trust common stock for each share of outstanding stock in either CV Reit or Kranzco. The new company will trade on the New York Stock Exchange. Its combined properties will encompass approximately 11 million sq. ft. in 16 states. Major anchor tenants include supermarkets, discount stores and drugstores such as Albertson's, Wal-Mart, Kmart, The Home Depot, CVS and Eckerd Drugs.
Noting the 98% occupancy rates at CV Reit's properties, Meshon said that early efforts will focus on boosting the former Kranzco properties' 92% occupancy rate, in part through an aggressive upgrading and maintenance program.
Management Contracts Chicago-based General Growth Properties announced that it has acquired management contracts for 13 regional malls since late 1998. The GLA of the acquired properties totals 10.8 million sq. ft., according to the company's management division.
General Growth now owns interests in or manages 131 shopping malls in 39 states, comprising more than 105 million sq. ft. of retail space. The 13 additional contracts bring GGP's management portfolio to a total of 42 properties encompassing 34 million sq. ft. of retail space.
The additional properties include: Baybrook Mall, Houston, Texas (1 million sq. ft.); Broward Mall, Plantation, Fla. (1 million sq. ft.); First Colony Mall, Houston (919,000 sq. ft.); Mall Del Norte, Laredo, Texas (1.3 million sq. ft.); Northpark Mall, Joplin, Miss. (1 million sq. ft.); Silver City Galleria, Taunton, Mass. (1 million sq. ft.); Tulsa Promenade, Tulsa, Okla. (1.1 million sq. ft.); and WestShore Plaza, Tampa, Fla. (1 million sq. ft.).
Toronto-based Falk of North America recently chose North Plainfield, N.J.-based Levin Management Corp. to operate three eastern Pennsylvania shopping centers. The deal came at the suggestion of Giant Food, the anchor tenant for all three centers, Levin announced.
The properties are: Carlisle Marketplace, a 90,000 sq. ft. center in Carlisle; Horsham Point, a 75,000 sq. ft. center in Horsham; and New Garden Town Square, a 103,000 sq. ft. center in Kennett Square. The new assignments bring Levin's portfolio to 79 properties in six states, with more than 9 million sq. ft. of GLA under management.
Transwestern Commercial Services has been chosen to manage and lease the Marq*E entertainment center in Houston. The 360,000 sq. ft., $70 million open-air center includes a 22-screen theater, an IMAX theater and a wide range of tenants, including restaurants, bars, coffee shops, arcades and numerous specialty stores.
Chicago-based Transwestern, a private full-service commercial real estate company, now oversees 650 properties encompassing more than 90 million sq. ft. of GLA. Its portfolio is valued at more than $8.5 billion.
Sales & acquisitions Oak Brook, Ill.-based McDonald's Corp. recently announced plans to acquire 751 Boston Market restaurants from the debt-ridden Boston Chicken company of Golden, Colo., for $173.5 million.
The hamburger chain, which will acquire franchise rights for an additional 108 Boston Market restaurants, expects the deal to close by mid-2000. McDonald's will use some of the Boston Market sites to expand two of its franchise restaurants, Chipotle Mexican Grill and Donatos Pizza. Boston Chicken filed for bankruptcy protection last year, reporting debt of more than $900 million. The Atlanta-based retail division of real estate giant Jones Lang LaSalle announced that it will handle lease negotiations for all 751 stores and will perform due diligence work for McDonald's related to the acquisition.
Walton Street Capital of Chicago recently acquired the 2.7 million sq. ft. Houston Galleria complex in Houston for an undisclosed purchase price. Walton Street, a private real estate company backed by large institutional investors, bought the mixed-use complex from Hines Interests L.P., based in Houston.
Houston Galleria includes 1.6 million sq. ft. of retail space, with 750,000 sq. ft. of new retail development in the planning stages. The Galleria's three office towers total 1.1 million sq. ft., and its two Westin Hotels contain a total of 891 rooms.
Pan Pacific Retail Properties Inc. of San Diego recently acquired two Southern California shopping centers from undisclosed private partnerships for $31.6 million. Average household income near each of the grocery-anchored neighborhood centers exceeds $70,000, Pan Pacific announced. The properties are Rancho Las Palmas, a 178,700 sq. ft. center near Palm Springs anchored by Vons Supermarket and Longs Drugstore; and Canyon Square Plaza, a 104,200 sq. ft. center in Santa Clarita anchored by Lucky Supermarket.
Pan Pacific focuses on community and neighborhood centers, primarily in California, Washington, Oregon and Nevada. A REIT, Pan Pacific now owns 57 properties totaling more than 8.8 million sq. ft. of retail space.
Edens & Avant of Charlotte, N.C., recently acquired a 272,000 sq. ft. community shopping center in suburban Charlotte for $27.5 million. The Franklin Square III center in Gastonia includes tenants such as Kohl's, The Sports Authority, PetsMart and Party City. It is less than 2 years old and is 100% leased.
Edens & Avant acquired the center from AAC Real Estate Services, a development firm withoffices in Charlotte and New York.
Los Angeles-based Doerken Properties recently acquired Courtyard of Encino shopping center for $12 million from an undisclosed San Gabriel, Calif.-based private partnership. The 113,462 sq. ft. shopping center is in the heart of the retail corridor on Ventura Boulevard in Encino, Calif.
The Macerich Co. of Santa Monica, Calif., recently acquired Santa Monica Place in Southern California from Columbia, Md.-based The Rouse Co. for approximately $130 million. The 560,000 sq. ft. enclosed regional mall serves as an anchor to Santa Monica's rapidly growing retail district.
CRES Development Co. Inc. of Lynnfield, Mass., recently acquired Caperoads Plaza, a 158,000 sq. ft. community shopping center in Raynham, Mass. The center was purchased from an undisclosed private owner for $6.7 million. Plans call for a renovation and remerchandising of the center, which is anchored by Kmart, Staples and New York Carpet World.
CRES Development owns more than 2 million sq. ft. of commercial space in New England. The company in October announced plans to spend at least $50 million to acquire individual properties or portfolios in the New England region.
Other Transactions Burnham Pacific Properties of San Diego announced plans to cash out of its $663 million partnership with the California Public Employees Retirement System (CalPERS), the nation's largest public pension fund. The two investors had planned to buy 28 community shopping centers from San Francisco-based AMB Property Corp. But Burnham announced plans to exchange all of its equity interest in the joint venture in return for cash and one property. According to Burnham CEO David Martin, the company was seeking greater liquidity and financial flexibility.
Burnham and CalPERS in December announced their third and final joint purchase formulated under the original contract: the $107 million acquisition of four retail centers from AMB totaling 932,000 sq. ft. The four retail centers are in California, Texas and Washington.
Two leading financial services firms have joined forces in the CMBS market. The FINOVA Group Inc. and J.P. Morgan & Co. Inc. recently formed a program to originate and securitize commercial mortage-backed securities. FINOVA will originate and close the loans; J.P. Morgan will fund and warehouse the loans, then securitize them in pools mixed with other loans originated by J.P. Morgan of New York City.
In 1999, J.P. Morgan closed $2.1 billion of commercial real estate loans for securitization, while Phoenix-based FINOVA originated $1.1 billion in the same loan category, the companies announced.