Former Inland Western's shares jump after offering price slashed
(Updated 4:20 p.m.)
(Crain's) — Retail Properties of America Inc., the former Inland Western Retail Real Estate Trust Inc., priced its Class A stock offering at $8 a share, down sharply from a previously expected range of $10 to $12.
The stock closed at $8.75 Thursday afternoon, ending its New York Stock Exchange debut up 9.4 percent on the day.
The lower offering price is a sign that Wall Street investors had little appetite for a real estate investment trust's 44 million-square-foot portfolio of shopping centers in states such as Texas, California and New York. Its local properties include Brickyard Mall on the Northwest Side.
The offering was a sale to the public of stock held by existing shareholders in the REIT.
At $8 a sale, the sale is a big loss for those shareholders, many of whom bought their stock in 2003.
In a latter to shareholders today, President and CEo Steven P. Grimes wrote: "The real estate market was severely impacted by the economic recession and still has not fully recovered. It is uncertain as to if, and when, we will see a full recovery."
He also told investors in the letter that: "We have a demonstrated leasing and property management platform, an experienced management team with a proven track record of successfully navigating through turbulent times, and a capital structure that we believe is well positioned for growth."
The sale potentially raised just under $293 million for stockholders in the Oak Brook-based real estate investment trust. The shopping center owner is offering 31.8 million Class A shares, with the underwriting investment banks having the option to buy another 4.8 million shares.
The REIT had previously it expected to raise as much as $439 million, based on a sale price in the range of $10 to $12 a share.
Retail Properties plans to sell the shares as part of a phased-in program to provide investors an opportunity to cash out. The company recently completed a reverse stock split and one-time stock dividend in preparation of the offering.
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