LV real estate holder buys rival for $440 mil.

Tuesday, Aug. 22, 2000 | 11:12 a.m.

Pan Pacific Retail Properties, a California-based shopping center developer with six properties and a regional office in the Las Vegas area, said today it's acquiring a rival company in a $440 million stock and debt deal.

Company officials say the acquisition of Western Properties Trust, Emeryville, Calif., will create the West Coast's largest neighborhood shopping center real estate investment trust.

Western Properties has no shopping centers in Las Vegas, but has two each in Reno and Fallon and one each in Elko, Carson City and Winnemucca.

Pan Pacific operates the Sahara Pavilion North, Sahara Pavilion South, Cheyenne Commons, Rainbow Promenade, Green Valley Town and Country and Winterwood Pavilion shopping centers in the Las Vegas area.

A spokeswoman for Pan Pacific said the transaction ultimately may lead to growth in Las Vegas because of the relationships Western Properties brings to the deal. Western's biggest tenant is the Raley's supermarket chain. Sacramento, Calif.-based Raley's entered the Las Vegas market in September 1999 when it took over 19 Albertson's stores. Albertson's vacated its stores and two months later moved into the 28 Lucky stores it acquired in a $13 billion merger with American Stores Co.

When the transaction is completed, Raley's will supplant Wal-Mart as Pan Pacific's largest tenant by annual rental receipts, at $7.7 million to Wal-Mart's $3.6 million. Pan Pacific's third-largest tenant, Safeway -- the parent company to Vons supermarkets -- is the tenant that dominates its Las Vegas centers.

Vons is the major tenant at Sahara Pavilion North and Winterwood.

Pan Pacific's one Henderson and five Las Vegas centers lease a total of 1.4 million square feet, the largest of which is the 362,758-square-foot Cheyenne Commons at U.S. 95 and Cheyenne Avenue. It features a Wal-Mart, a 24-Hour Fitness Center and Ross Dress for Less.

Pan Pacific's portfolio will increase from 60 properties to 110, totalling 14.3 million square feet. The company will increase its tenant base by 50 percent to 2,100 retailers. The deal will strengthen Pan Pacific's position in Northern California.

The deal, which must be approved by regulators and shareholders of both companies, is a stock-for-stock transaction with each Western share exchanged for 0.62 Pan Pacific share. Pan Pacific's largest shareholder, Revenue Properties Co. Ltd., which holds a 51 percent ownership position, has agreed to vote its 10.8 million shares in favor of the deal.

Pan Pacific will increase its quarterly dividend from 42 cents per share to 45.5 cents per share, Western's current dividend level.

When the deal is completed, Pan Pacific will expand its board of directors to seven members, adding two of Western's existing independent members from its board of trustees. With those additions, five of the seven Pan Pacific board members will be independent.

Shares of Vista, Calif.-based Pan Pacific, traded on the New York Stock Exchange, was down 19 cents a share from Monday's closing price to $20.375 in this morning's trading. Western, traded on the American Stock Exchange, were down 25 cents a share to $12.25 this morning.

Both are trading near their 52-week highs, $21 for Pan Pacific and $12.69 for Western.

Besides its interest in Pan Pacific, Toronto-based Revenue Properties has an interest in the PT's Pub chain of neighborhood video poker bars in Las Vegas.