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Family feud; trading places

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Real Estate News & Analysis: May Edition


Family feud; trading places

S&P Global Market Intelligence offers our top picks of U.S. real estate news stories and more published throughout the week. Please note that some entries may have links to third-party sources that may require a subscription.

Family feud

* Taubman Centers Inc. took another blow from shareholder activist Land & Buildings Investment Management LLC, this time targeting the founding family's ownership of a large stake in the company's preferred stock.

Land & Buildings' Jonathan Litt argued in a letter made public Dec. 13 that the Taubman family owned the equivalent of 30% of the voting stock, which he said potentially violates the company's charter. To protect common shareholder interest and Taubman's REIT status, Litt proposed the engagement of independent advisers to ensure the board enforces the 8.23% ownership limit provided in the company's charter.

To enhance board oversight and governance, Taubman disclosed Dec. 15 that it created a lead director position and gave the role to current board member Myron Ullman III. The company also named Cia Buckley Marakovits to its board, succeeding William Parfet, who resigned in late September.

Trading places

* In a surprise announcement Dec. 14, Host Hotels & Resorts Inc. disclosed that W. Edward Walter is stepping down as its president and CEO and will be succeeded by James Risoleo, the company's executive vice president and managing director of investments for the West Coast and Europe. Host Hotels announced Dec. 15 that it will pay a special dividend of 5 cents per share, which will be doled out Jan. 17, 2017, with its regular quarterly dividend.

Commenting on the news, Canaccord Genuity analyst Ryan Meliker said he thinks Walter's resignation might spark positive market reaction, but that reaction could be muted by the company's decision to hire an internal candidate.

* DDR Corp. took the first step in what President and CEO Tom August had earlier said was a plan to bring in more executives, revealing Dec. 14 that it tapped Forest City Realty Trust Inc.'s William Ross as its COO, starting Jan. 3, 2017.

Mizuho Securities USA Inc.'s Haendel St. Juste and Jieren Huang view the development favorably, saying they believe Ross is "sufficiently experienced" for the role and that together with DDR Head of Leasing and Development Vince Corno, they can provide the company with "the best one-two punch on retail leasing and operations," the duo said in a Dec. 14 note.

* In other management changes, General Growth Properties Inc. said Dec. 15 that Shobi Khan will serve as its president in addition to his role as COO of the company. The promotion was effective immediately.

* On the development front, SL Green Realty Corp. was rumored to be changing directions with respect to its One Vanderbilt office tower project in Midtown Manhattan, N.Y. According to a Dec. 10 report in The Wall Street Journal, the office REIT presented a "complicated deal" to J.P. Morgan Chase that would see the bank's two Midtown headquarter buildings swapped for One Vanderbilt.

Although J.P. Morgan has been considering the idea, no negotiations have been initiated, the publication reported, citing unnamed sources. The news came on the heels of a Bloomberg News report that SL Green is aiming to add an observation deck at One Vanderbilt and that the company was in talks with a foreign investor for a $500 million investment in the project.

Ruled out

* New York REIT disclosed in a Dec. 12 filing that an appeal to overturn a court ruling involving its acquisition of a 48.9% stake in Worldwide Plaza in Manhattan, N.Y., has been denied. The appeal by RXR Realty involved the New York State Supreme Court's earlier decision to dismiss that company's lawsuit claiming it suffered "lost profits" related to the REIT's purchase of the stake in the office tower.

Meanwhile, New York REIT on Dec. 9 said the vote on its liquidation and dissolution plan has been pushed back to January 2017, from an earlier rescheduled date of Dec. 30.

* Speaking of lawsuits, shareholder claims related to the pending tri-party merger of NorthStar Asset Management, Colony Capital Inc. and NorthStar Realty Finance Corp. have been resolved. According to Dec. 12 filings, NorthStar Asset Management and Colony Capital agreed to disclose standalone revenue estimates as part of the settlement with their respective shareholders. The deal, which is expected to close in January 2017, recently won vows of support from shareholders after initial objections were addressed.

Breaking it down

* In response to shareholder calls, Consolidated-Tomoka Land Co. on Dec. 14 issued information aimed at casting more light on the company's recently concluded strategic review and what led to its decision to stick with its current business plan.

The company clarified that since no deal was consummated, it did not pay a fee to Deutsche Bank, which it engaged as financial adviser in line with its strategic review. It noted that carrying on with its business plan was "the best way to maximize shareholder value" and monetize its land and other assets.

Racking up

* CoreCivic Inc. announced Dec. 14 that it scored a contract from U.S. Immigration and Customs Enforcement at its 2,016-bed Northeast Ohio Correctional Center. The new contract follows the company's recent announcement that it reduced its quarterly dividend to reflect the business' current cash flows after ICE renegotiated its contract for a Texas facility in October.

* Hudson Pacific Properties Inc. said Dec. 13 that it ponied up $150 million to gain a leasehold interest in the Page Mill Hill office campus in Palo Alto, Calif. The transaction expands the company's footprint in Palo Alto's Stanford Research Park.

* Farmland Partners Inc. on Dec. 14 said it is poised to buy 8,638 acres of farmland in Illinois in a $55.3 million cash transaction, which should be completed in the first quarter of 2017.

Featured during the week on S&P Global Market Intelligence

Data Dispatch: US real estate companies pay 21 special dividends YTD: Eighteen SNL-covered publicly traded U.S. real estate companies made special dividend payments year-to-date as of Dec. 6. Diversified REIT Gyrodyne made the largest single per-share payment among the group.

Data Dispatch: Multifamily lending keeps towering: Multifamily loans continued their brisk double-digit growth in the third quarter of 2016, even as industry participants prepare for some softening in the space.