BRE Properties Inc. (BRE), a real estate investment trust (REIT) that operates apartment communities, has recently completed its secondary offering of 9.2 million common shares at $48.00 each, including 1.2 million shares purchased by the underwriters to fully cover the over-allotment options.
BofA Merrill Lynch, the investment banking and wealth management division of Bank of America Corporation (BAC); J.P. Morgan Securities LLC, the investment banking division of JPMorgan Chase & Co. (JPM); and Wells Fargo Securities, the investment banking division of Wells Fargo & Company (WFC) acted as joint book-running managers for the offering.
BRE Properties intends to utilize the proceeds from the equity offer primarily to repay its debt under its revolving credit facility and redeem the outstanding shares of its 6.75% Series C preferred stock. In addition, the company also anticipates utilizing the remainder of the proceeds to fund its development activity and for acquisition of properties.
BRE Properties develops, acquires, and manages multi-family apartment communities primarily in the Western U.S., where it currently operates in three states: California, Washington and Arizona. Since its inception in 1970, BRE Properties has provided long-term value to shareholders by focusing on developing and acquiring apartment homes with customer-defined amenities, and providing professional management services delivered by well-trained associates.
The properties of the company are usually located near business, transportation, employment and recreation centers of a city, which are essential for customers who value the convenience, service and flexibility of rental living. As of March 31, 2011, its multifamily portfolio had real estate assets with a net book value of approximately $3.1 billion.
These included 76 wholly- or majority-owned stabilized multifamily communities, totaling 21,538 units in California, Washington and Arizona; 13 stabilized joint venture multifamily communities totaling 4,080 apartment units; and 7 apartment communities in various stages of construction and development.
We maintain our ‘Neutral’ rating on BRE Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating, indicating that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.
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