Brixmor Aims to Raise $787M in REIT IPO

By Peter Fabris, Contributing Editor

The second-largest U.S. shopping-center landlord, Brixmor Property Group Inc., is hoping to raise $787.5 million in a U.S. initial public offering largely to pay down debt. The REIT, owned by Blackstone Group LP, is offering 37.5 million shares for $19 to $21 each. Proceeds will be used mainly to pay down about $628.5 million in debt, the company indicated in its SEC filing.

New York-based Brixmor manages a national portfolio of about 522 retail properties totaling more than 87 million square feet of retail space. Its shopping centers, located in 39 states, are primarily anchored by grocers or leading discounters. Brixmor is the largest landlord (by gross leasable retail space) to The TJX Cos., The Kroger Co., Ahold USA, Dollar Tree, Inc., and Staples, Inc., according to the company’s website.

“We believe that our IPO Portfolio provides us with further opportunity for meaningful Net Operating Income (NOI) growth over the coming years,” the company said in its filing. “The key drivers of this growth will be a combination of occupancy increases across both our anchor (spaces of greater than or equal to 10,000 sq. ft. of GLA) and small shop (spaces of less than 10,000 sq. ft. of GLA) space, positive rent spreads from below-market in-place rents and significant near-term lease rollover, and the realization of embedded redevelopment opportunities.”

The company intends to list on the New York Stock Exchange under the symbol “BRX”. Bank of America Merrill Lynch, Citigroup, JP Morgan, Wells Fargo Securities and Barclays are among the lead underwriters for the IPO.

Blackstone acquired the bulk of Brixmor’s assets in 2011, when it bought U.S. shopping centers from Centro Properties Group of Australia for $9 billion.

Brixmor says it has divested many of the low-performing properties acquired in the Centro deal. “Since 2005, we have sold or distributed 238 shopping centers, or 33 percent of the shopping centers originally acquired by Centro,” the filing says. “The divested shopping centers were characterized by weaker average occupancies, demographics, grocer sales levels and tenant quality compared with our IPO Portfolio.”

Brixmor says that it is not planning to unload many more properties, at least in the near term. “Our management will … focus on optimizing returns from our IPO Portfolio without the distraction that would otherwise accompany the execution of major property dispositions,” the filing says

Brixmor will now focus much of its attention on redevelopment and renovations. “We currently have 23 active anchor projects, with an expected aggregate cost of $93 million and a targeted NOI yield of 15 percent,” the filing said. “Given the continual evolution of retailer concepts and store prototypes, as well as the lack of significant new development in the United States, we expect to maintain our current pace of anchor-related projects over the foreseeable future. We believe anchor repositioning is critical to the success of our company.”

Brixmor says its current portfolio is performing well. “Our Same Property Portfolio delivered same property NOI growth of 3.8 percent and 4.2 percent during the year ended Dec. 31, 2012 and the six months ended June 30, 2013, respectively,” the filing said. Those results were better than the peer averages of 3.2 percent and 3.8 percent during those periods, according to the filing.