June 8, 2011
\nBy Paul Rosta, Senior Editor<\/p>\n
Veteran executives offered insights into the fine art of the corporate merger Wednesday afternoon at the National Association of Real Estate Investment Trust\u2019s annual REITWeek event in New York City.<\/p>\n
Speaking to a packed ballroom at the Waldorf-Astoria Hotel, panelists discussed the challenges and strategies involved in public-to-public and private-to-public moves.\u00a0 Patience was a virtue when ProLogis and AMB Property Corp. joined forces, noted Walt Rakowich, co-CEO of the giant industrial REIT, which has completed six mergers since 1998. Although the ProLogis-AMB deal closed only last week, Rakowich and Hamid Moghadam, chairman and co-CEO, discussed a merger several times over the years before the two stock value and other factors made the time right.<\/p>\n
\u201cI think the best time to merge, if you can, is when the markets are coming out of the recession,\u201d said Rakowich, who will retire at the end of 2012 and\u00a0hand over\u00a0sole CEO\u00a0duty to Moghadam.\u00a0 During a recovery, clients are often in expansion mode, providing the opportunity for service providers to ramp up alongside them, Rakowich explained.<\/p>\n
The long gestation period that often precedes mergers makes it imperative to continuously educate the board of directors about potentially attractive combinations, said Ventas Inc. chairman & CEO Debra Cafaro, who has recently overseen massive mergers with Lillibridge Healthcare Services Inc., Altria Senior Living Group and Nationwide Health Properties Inc. \u201cHearing about them over the years has an accretive benefit\u201d for board members, she said, adding, \u00a0\u201cI really believe that all that pre-work has benefited us.\u201d<\/p>\n
Along those lines, Rakowich maintained that obtaining buy-in from the handful of top people in the company is crucial to a successful merger. That also calls for a tricky balancing act, however:\u00a0 \u201cGetting employees on board with these things and not letting it leak out is really hard,\u201d Rakowich observed.<\/p>\n
Panelists also saw encouraging signs in the expanding role of private equity players in corporate acquisitions. A case in point: Blackstone Group L.P.\u2019s recent $9.4 billion purchase of Centro Properties\u2019 U.S. retail holdings. \u201cYou\u2019re seeing more private equity going in that direction today, which is driven entirely by leverage,\u201d explained Matthew Lustig, vice chairman of investment banking & head of real estate at Lazard Feres & Co. L.L.C.<\/p>\n","protected":false},"excerpt":{"rendered":"
Veteran leaders revealed what makes real estate mergers work. <\/p>\n","protected":false},"author":445,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37774,37775,21742,37776,37777,37778],"tags":[],"class_list":["post-1004030094","post","type-post","status-publish","format-standard","hentry","category-rc-dividend-yield","category-rc-forward-affo-payout-ratios","category-latest","category-rc-premium-discount-to-nav","category-rc-price-ltm-ffo","category-rc-total-return"],"acf":[],"yoast_head":"\n