* About 12 commercial real estate IPOs in the pipeline
* Archstone, Centro eyed as possible IPOs
* IPOs taking longer to bring to market
By Ilaina Jonas and Clare Baldwin
NEW YORK, June 18 U.S. commercial property
companies are likely to try to go public in greater numbers in
coming months as they look to refinance billions of dollars of
mortgage debt left over from the boom years of 2005-2007.
About $1.24 trillion of U.S. commercial real estate loans
-- $1.02 trillion held by banks and $221.5 billion bundled into
bonds known as commercial mortgage-backed securities -- will
need to be refinanced over the next four years, according to
Many lenders have little capacity to refinance or make new
investments in these mortgages.
There are about 12 property real estate investment trust
IPOs in the pipeline, according to Thomson Reuters research.
After the last big downturn, which started around 1990, 108
property companies went public over the following six years,
according to the National Association of Real Estate Investment
Trusts, while in the current bust that began in late 2007 only
eight have launched IPOs.
A big reason for the dearth of IPOs so far is that
ownership of property companies and their debt structures are
much more complicated these days than in the 1990s, when many
firms were family-run operations that arranged loans from a
bank or savings and loan institution.
Today, commercial real estate is often held by funds owned
by institutional investors and managed by third parties.
"You don't push a button and go public," Martin Cicco,
senior manager and head of Real Estate Advisory Practice at
investment bank Evercore Partners, said at the Reuters Global
Real Estate and Infrastructure Summit this week.
James Koster, president of capital markets at Jones Lang
LaSalle (JLL.N), said it could take a few months yet before
companies will be confident enough to go to the market.
"Assuming we have a relatively stable summer, you're
looking at a fall timeline for people to re-initiate at least
some of the strongest strategies on the IPO side," he said.
Another reason for the slow deal flow is that borrowers
have yet to feel the urgency to raise more capital because
regulators have allowed lenders to extend loan terms until
banks are healthy enough to absorb losses.
Also, some real estate companies that have tried to raise
equity capital recently have been snubbed.
Welsh Property Trust Inc WLS.N, owner of industrial and
office properties, scaled back its plans for its roughly $350
million IPO in early June, and then shelved them altogether.
High-end hotel company Chesapeake Lodging Trust (CHSP.N),
debuted in late January after first delaying its IPO and then
shrinking it by 40 percent. Its shares now trade 14 percent
below their reduced IPO price.
The biggest commercial real estate IPOs in the pipeline
hope to raise as much as $575 million, according to Thomson
Reuters data. Among them is Younan Properties Inc, which owns
office buildings in Dallas, Fort Worth, Houston and Phoenix.
Hudson Pacific Properties, which owns office properties in
Northern and Southern California, hopes to raise about $230
million in an IPO expected next Wednesday. The company will
trade under the symbol "HPP" on the New York Stock Exchange.
With the Greek debt crisis, the "flash crash", and an
uncertain economic outlook, investors have become much more
jittery about IPOs in recent weeks. "The market was wide open
until about six or seven weeks ago," said Cicco.
A number of new U.S. issues have been reduced in size, had
their price range cut or have been postponed or canceled,
although the success of the flotation of exchange operator CBOE
Holdings Inc (BOBE.O) showed there was still appetite for new
issues with a strong balance sheet and high growth potential.
In the property sector, America Realty Trust ACE.N, an
owner of refrigerated warehouses backed by billionaire West
Coast investor Ron Burkle, said it was postponing its offering
Apartment owner Archstone is considered a particularly
strong candidate for an IPO. Once publicly traded, it was taken
private by Tishman Speyer and Lehman Brothers MERQ.PK in late
2007 in a deal worth $22 billion.
But it is part of the Lehman bankruptcy, and IPO plans must
first get the go-ahead from the bankruptcy court and creditors
Bank of America Corp (BAC.N) and Barclays Plc (BAC.N).
"My guess is it will be mid next year," Chico said.
Australia-based Centro's portfolio of 700 U.S. shopping
centers is another potential candidate for a share sale.
The portfolio of shopping centers is chiefly anchored by
grocery or drugstores. Centro acquired the properties when it
bought New Plan Excel for $6.2 billion in 2007. Centro, too, is
in the hands of creditors and an IPO will take time.
(Reporting by Ilaina Jonas and Clare Baldwin; Editing by