Pan Pacific Acquiring Center Trust for $600M

SAN DIEGO, CA-Pan Pacific Retail Properties has agreed to acquire Center Trust in a transaction valued at $600 million, which is expected to greatly increase the company’s presence in Southern California, as well as solidify its leadership position among shopping center REITS on the West Coast.

After the transaction is completed, Pan Pacific will own 138 shopping centers diversified across the West Coast, encompassing 19.4 million sf, with a total market capitalization of approximately $2.3 billion. This includes an equity market capitalization of approximately $1.4 billion, based on Pan Pacific’s closing price as of November 5, 2002. Pan Pacific’s share base will grow 18% from 34.7 million shares to 41.1 million shares as a result of the merger, which is also expected to increase the company’s FFO per share by 10% in 2003, according to Stuart A. Tanz, Pan Pacific’s president and CEO.

According to the terms of the transaction, Pan Pacific will issue approximately 6.4 million shares of common stock to Center Trust’s equity holders. The company also plans to assume around $136 million of Center Trust’s secured debt, which bears interest at a weighted average fixed interest rate of 6.3%. It will also retire approximately $228 million of Center Trust’s secured debt after the closing through a combination of new Pan Pacific unsecured debt and the sale of certain non-core assets.

The deal, which is being structured as a tax-free merger, is scheduled to close in the first quarter of 2003. It has been unanimously approved by each company’s board of directors and is now subject to approval by a two-thirds vote of the Center Trust stockholders and other customary conditions.