IPO for giant retail REIT may be biggest since Simon

The initial public offering of Brixmor Property Group, the second-largest U.S. shopping center landlord, may be the biggest for a retail real estate investment trust since Simon Property Group Inc.’s IPO 20 years ago.

The sale of shares in New York-based Brixmor, a Blackstone Group LP unit, probably “will raise $700 million or more,” according to Renaissance Capital LLC, a Greenwich, Connecticut-based research firm. That would be the largest IPO by a shopping-focused REIT since Simon’s $840 million share sale in 1993, data from the National Association of Real Estate Investment Trusts show.

Brixmor yesterday made its first filing to go public, with pricing yet to be announced. New York-based Blackstone is taking advantage of a rally in shares of REITs that own and operate shopping centers. The Bloomberg REIT Shopping Center index is up about 11 percent from a low on June 20 after falling from a five-year high in May amid concern that rising interest rates would increase landlords’ costs.

Simon and Brixmor operate in different sectors of the retail REIT industry. Brixmor owns mainly grocery store-anchored, open-air centers, while Indianapolis-based Simon owns mainly enclosed malls and upscale outlets.

Brixmor owns 522 shopping centers with 87 million square feet of space. The assets that form Brixmor’s core were acquired in Blackstone’s $9 billion purchase of U.S. shopping centers from Australia’s Centro Properties Group in 2011.

Local properties in the Brixmor portfolio include Speedway Super Center, Westlane Shopping Center, Marwood Plaza and Meridian Village Plaza in Carmel.

Brixmor is second to Kimco Realty Corp. among U.S. shopping-center landlords by number of properties. Peter Rose, a Blackstone spokesman, declined to comment on the planned Brixmor stock sale.

Simon, the country’s biggest owner of shopping malls, was the fifth-biggest IPO of a property trust, according to the REIT association. There have been eight REIT IPOs of more than $700 million, the trade group said.

Brixmor is the third-biggest real estate asset held by Blackstone, which has said it plans to sell large property holdings over the next 12 to 18 months as property values rebound from the financial crisis and some funds approach the end of their term. The company reiterated that guidance in its second-quarter earnings conference call yesterday.

“Realizations in real estate continue to ramp up,” Blackstone President Tony James said on the call.

The firm has said it’s planning an IPO for the Hilton Worldwide Inc. hotel chain, and sales of office buildings acquired in the $39 billion purchase of Equity Office Properties Trust in 2007, the firm’s two biggest property holdings.

The firm sold $2.1 billion of real estate assets last quarter, including shares of General Growth Properties Inc., the largest U.S. mall landlord after Simon, James said.

Blackstone, the world’s biggest manager of alternative investments to stocks and bonds, hasn’t said whether it would sell any shares in the Brixmor IPO. It said it plans to hold a majority stake in the company after the sale.

The shares will trade under the symbol BRX. Brixmor will use the proceeds from the offering primarily to repay debt. The company obtained a $2.75 billion credit facility from a group of banks on July 16, according to the filing. Revenue rose 2.3 percent in the first quarter from a year earlier to $287.1 million, Brixmor said in the filing. The company’s net loss narrowed to $19.5 million from $37.9 million.