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Inland Real Estate to be acquired in $2.3 billion deal

December 16, 2015

December 15, 2015

Inland Real Estate Corp. agreed to be bought in a deal worth about $2.3 billion.

Oak Brook-based Inland, a public company, will become a privately held real estate investment trust after the acquisition by funds advised by DRA Advisors, an investment adviser.

Inland’s board “has been focused on the options available to address the long-term discount at which the company’s shares have traded versus private market valuations and its shopping center REIT peers,” non-executive Chairman Thomas P. D’Arcy said in a statement. “The board unanimously believes this all-cash offer is the best course of action to address this valuation gap and provide our stockholders with strong relative value for their investment.”

The DRA funds will pay $10.60 a share in cash for Inland, a 6.6 percent premium over yesterday’s closing price, the statement said. The $2.3 billion deal value includes assumed debt.

The agreement “culminates a process that included extensive discussions with other potential strategic and financial buyers,” Inland said.

Inland has “quality assets, a strong management team and great long-term potential,” DRA President David Luski said in the statement.

More REITs have become takeover candidates this year as their share prices have fallen below the perceived value of their properties. Deep-pocketed investors are taking advantage of the pricing discrepancy between the public and private markets, buying companies that they believe are worth more than what the stock market says they are. Earlier this month, big New York-based private equity firm Blackstone Group took Chicago-based Strategic Hotels & Resorts private in a $4 billion deal.

At the end of the third quarter, Inland had interests in 135 properties totaling about 15 million square feet of leasable space. Many of its properties are anchored by grocery stores, and the company has significant concentrations in the Chicago and Minneapolis-St. Paul areas.

Founded in 1994, Inland Real Estate was the first REIT launched by the Inland Group, an Oak Brook-based company known for sponsoring non-traded REITs, public real estate companies whose shares don’t trade on a stock exchange.

New York-based DRA specializes in real estate. It has $6.8 billion of assets under management, Inland said in its statement.

Inland stock was up about 6.6 percent this morning to $10.60, DRA’s offer price.

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John E. Moriarty, ChFC
December 2015
February 3, 2016

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