Unfazed by a possible REIT market top, nor by subprime's ripple effect, Australia's Centro Properties Group announced a unanimously approved plan to buy New Plan Excel Realty Trust for $3.4 billion in cash, $33.15/share -- a 13% premium over Tuesday's $29.34 close. This is Centro's third U.S. REIT purchase including last year's Kramont and Heritage acquisitions, and will make it the fifth largest manager of U.S. shopping centers. Centro said the deal will add 10% growth in 2007/2008 and 7% annually onward. Analysts expect another 10% rise on the stock, but some doubted the timing and capabilities of the Australian group. Centro says more than 70% of New Plan's shopping centers were part of a major supermarket, a Wal-Mart or a Kroger's, buffering Centro from fluctuating consumer spending, and Kimco Realty, the largest U.S. mall operator announced a 23% earnings increase in Q4. Centro has said it will retain $1.8b of properties, and raise close to $1b to finance the deal. This deal will raise Centro's managed funds by 48% to Australian $23b.
Sources: Reuters, PR Newswire, Wall St. Journal, Financial Standard, Bloomberg, Australia's The Age
Commentary: Real Estate Stocks Are Done - Really?!? • Housing Bubble and Real Estate Market Tracker • Look For Continued REIT Weakness -- Barron's
Stocks/ETFs to watch: New Plan Excel Realty Trust Inc. (NXL). Competitors: Kimco Realty (NYSE:KIM). ETFs: iShares Dow Jones U.S. Real Estate Index (NYSEARCA:IYR), streetTRACKS Dow Jones Wilshire REIT Index (NYSEARCA:RWR)
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