Is a Ramco-Equity One Merger Logical?

A possible merger between two publicly-traded retail REITs? What is this, like, 2006?

News we thought we wouldn’t see for a very long time is shaping up. Apparently Jeffrey Olson, the chairman of Equity One sent a letter to Farmington Hills, MI-based Ramco-Gershenson Properties Trust’s management, saying that the two companies should form a “closer business relationship.”

In an SEC filing yesterday, Ramco said that, in addition to the letter from North Miami Beach, FL-based Equity One, it has “received indications of interest from third parties regarding certain potential transactions.” Click here to read the full Ramco filing, along with the Equity One letter. Equity One already owns 9.63% of Ramco’s outstanding shares.

Ramco owns 89 community centers in the Midwest and Southeast. Its highest concentration of assets is in Michigan and Florida where it owns 35 and 25 properties, respectively. Equity One’s 160 properties are primarily in the Southeast, 95 of them in Florida and 29 in Georgia. Equity One’s occupancy is at 92.1%, and Ramco’s is at 91.3%.

We haven’t seen any musings from analysts yet on this deal, but would a potential merger between these two companies make sense?

8 Responses to “Is a Ramco-Equity One Merger Logical?”

  1. 1 Luca Brasi March 26, 2009 at 9:37 am

    Dog + Dog = Bigger Dog. The last REIT merger Olsen orchestrated turned out to be a disaster, when Kimco overpaid for Pan Pacific.

  2. 2 kin powell March 26, 2009 at 11:30 am

    I think that size matters in the strip space. Rpt’s heritage is development, Eoy’s is management. @ the en d of this cycle the larger capital bases will prosper at the expense of the smalls, public & private owners alike .

  3. 3 James March 26, 2009 at 6:26 pm

    This is good thing but don’t be surprised if a bigger player steps in. When young, in about 1976 or so,I built a fantastic house, as project supervisor, for a very elderly Mr. Gershenson in Bloomfield Hills, Michigan. He was married to an attractive younger women and he was in his 80’s. He took out mortgage/life insurance. At the time, the house on a small lake was in the 2 million dollar range, a fabulous sum at the time. A year later he unfortunately passed away. The insurance paid off the mortgage. These folks know how to make money. “Take it to the limit one more time”.

  4. 4 Luca Brasi March 27, 2009 at 9:38 am

    Size Maters? Like Kimko’s Size? Like DDR’s Size? Like Centro’s size? Like GGP’s size?

    Larger company simply means less creativity, more beauracracy. Show me a REIT merger that worked.

    Small, lean and focussed is where it’s at.

  5. 5 Brave New World March 27, 2009 at 11:36 am

    ‘Size’ sometimes causes executives to develop Napoleon Complexes, i.e. seeking to conquer the world through asset accumulation. Ultimately, they are undone by the vastness of their unmanageable empire and the debt they’ve taken on to keep expanding their asset base. Medically, we can say it’s a case of acquisitionitis.

  6. 6 David Greene March 31, 2009 at 2:27 pm

    I think given the debt ratio of both companies and the natural mix of properties. I think this would be a very good merger. HOpefully the RPT shareholders get an appropriate price. The market is only valuing the rpt assets at around $40 psf this property is worth $100 psf if not $125 spf and more!!!

  7. 7 BiggerFishDilemma April 3, 2009 at 12:40 am

    To Luca Brasi: You’re right, Kimco overpaid for Pan Pacific, and Pan Pacific overpaid for Center Trust, and Center Trust overpaid for Alexander Haagen. Sounds like the end of an Era, to me.

  8. 8 retailman April 3, 2009 at 5:37 pm

    The one thing you can count on is that Jeff Olsen and his Pals will make alot of money in the merger and perhaps the shareholders won’t.Kimcos stock went from $49 to $8 under the pressure of his last merger and acquisitions. Quants never learn because all they know is quant stuff and have no idea other than that about what they are doing.Its all about them.stockholders? what stock holders. Grab your ankles Ramco-here comes the surprise!

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