Two REITs Sell Shares
To Raise Cash
by Kris Hudson
From The Wall Street Journal Online
March 31, 2008
Two real-estate companies turned to the stock markets to raise cash last week, trying to take advantage of a small resurgence of stocks in this sector after a battering over the past few months.
The move is a sign that issuing more shares, even as the risk of diluting holdings of current shareholders, could become an increasingly popular option for companies looking to raise funds while the debt markets continue to be largely stalled and especially if the stock prices continue to climb.
General Growth Properties Inc., the second-largest mall owner by market value behind Simon Property Group Inc., said Tuesday that it will sell 23 million shares at $36 apiece to raise $822 million for paring debt and other uses. This follows an announcement Monday from Capital Trust Inc., an investment-management company specializing in commercial real estate, that it is selling four million shares.
Many REITs preferred to divest assets to cut debt rather than sell loads of equity. The Dow Jones composite REIT index fell 22% last year and has recovered only 2% this year. This month, the index has climbed 7.2%.
For Chicago-based General Growth, the share sale is one of many strategies for coping with a hefty debt load of $24 billion, including $5.9 billion due this year and next.
Investors boosted General Growth's stock 7.2% to $41 in 4 p.m. composite trading Tuesday on the New York Stock Exchange.
A General Growth representative declined to comment on the equity sale. Capital Trust didn't return messages seeking comment.
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