The Camden-Summit merger has been this week's headline grabber. Richard J. Campo, CEO and chairman of the locally based Camden, tells GlobeSt.com that his plan is to hold a 20% interest in the JV portfolio and offer 80% to an institutional investor to drum up seed money for a $1.9-billion acquisition that requires a $434.4-million cash contribution.
Campo says it's uncertain at this point if the offering will be shopped in the US and abroad or end up a direct deal with a member of the REIT's investment circle. "At the end of the day, the perfect partner is the one who has the same value set that we have and the same goals," he says, adding that interested investors are already knocking on his door.
Campo says the JV predominately will be fueled by Camden assets, high-end properties with strong institutional investment appeal. He estimates the JV and other asset sales will pull 3,200 units from the Houston, Dallas and Las Vegas portfolios.
Right now, Camden has $130 million of assets waiting to be sold and the Charlotte, NC-based Summit's got $120 million under contract. The sales are set to close before the merger. Summit's gain will be applied to its debt, which Camden is assuming. The estimated debt assumption is $750 million. At the merger's closing, the combined portfolio is projected to be 66,819 apartment units, after all sales and the JV takedown.
A second JV could evolve from the Summit takeover, using the duo's development pipeline to stoke the plan. Camden has $42 million in pending contracts to buy land with a build-out potential of 1,119 apartments plus another $57 million in hand to raise another 2,076 units, according to yesterday's conference call.
The merger effectively accelerates Camden's growth plan by nearly five years and spreads out risk exposure by reducing heavy concentrations in core markets. "We've been working for 11 years to get to single digit...NOI in all markets," Campo says. For previous story, click here.
Talks began in June for a merger plan that's deemed doable due to changing dynamics of the multifamily market. "A year ago, I would never have done this transaction because I didn't feel like we were at the bottom," he says. "I really believe we're in the trough of the recessions...and the cash-flow growth in the portfolio will be higher than Camden's overall portfolio." Through the merger, Camden will get a foothold in 19 of 26 markets with the highest projections for growth in the US.
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