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Shopping Centers Today -> August 2001
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PONDERING PRIVATIZATION
By Debra Hazel
With undervalued stock, reporting of formerly private information and shareholders telling hitherto independent entrepreneurs what to do, why wouldn’t REIT executives consider taking their companies private again?
Some actually have, in a sense: Los Angeles-based Westfield America sold its outstanding U.S. stock to its publicly held Australian parent earlier this year, and Chicago-based Urban Shopping Centers was acquired last year by the Dutch property firm Rodamco.
Despite the Westfield and Urban transactions, no one really expects the industry to return to private hands.
“With the passage of time, entrepreneurs have adapted to the public markets,” said Milton Cooper, chairman and co-founder of New Hyde Park, N.Y.-based Kimco Realty, which kicked off the REIT revolution with its November 1991 IPO.” Where would the money come from?” asked John L. Bucksbaum, CEO of Chicago-based General Growth Properties. “The families can’t sell the stock, and the properties are pretty well financed, so there is not the opportunity to use that. So you would have to bring in a partner. Many companies are undervalued, so you’re talking about premiums. It’s difficult.”
That doesn’t mean it hasn’t crossed their minds a time or two.
“It is something we evaluate all the time,” said Scott A. Wolstein, president of Developers Diversified Realty, Cleveland. “We do what we have to to maintain shareholder value. I don’t think there will be a lot of it, but it is something every board has to consider.”
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