City Center shopping center in White Plains, New York. (Steve Carrea)
Kite Realty Group Trust, an Indianapolis-based real estate investment trust that owns and operates more than 50 shopping and retail centers around the country, announced plans this week to double in size by acquiring a rival in a stock-for-stock deal valued at $1.2 billion.
Sibling publication GlobeSt reports that Kite Realty will acquire the Inland Diversified Real Estate Trust, a non-traded REIT, in a transaction that will help it expand into new markets like Las Vegas, Salt Lake City and Westchester, N.Y. The deal is valued at $2.1 billion when including the roughly $1 billion in Inland Diversified debt that Kite Realty is poised to assume.
Hogan Lovells corporate partners David Bonser and Paul Manca in Washington, D.C., have taken the lead for Kite Realty on the deal, which is expected to close sometime in the next three months, pending shareholder approvals. Robert Solloway serves as senior real estate and corporate counsel for Kite Realty, while Gerald Moss, of counsel with Bingham Greenebaum Doll in Indianapolis, is a member of the REIT’s board of trustees. (Moss’ firm was forged through a late 2011 union of two leading Midwest firms, according to our previous reports.)
Also advising Kite Realty from Hogan Lovells are global co-CEO J. Warren Gorrell Jr., tax partner Prentiss Feagles, real estate finance partner Lee Berner, REIT and tax partner Cameron Cosby, corporate counsel Matt Thomson and associates Nicole Brown, Brandon Egren and Jan Shanklin. (The Am Law Daily reported in December that Gorrell will vacate his Hogan Lovells leadership role this summer to make way for litigator Stephen Immelt.)
Hogan Lovells has enjoyed a longtime relationship with Kite Realty. Gorrell and Bonser, the latter of whom heads Hogan Lovells’ equity and U.S. debt capital markets group, took the lead for the REIT a decade ago when it raised raised roughly $300 million in an initial public offering. (An SEC filing at the time lists $2.8 million in legal fees and expenses related to that listing.) The firm is also no stranger to big REIT M&A deals. A Gorrell-led Hogan Lovells team represented Parkway Properties last fall on its $1.1 billion purchase of Thomas Properties Group.
On the current deal, which some analysts believe is a harbinger of increased consolidation in the REIT space, Inland Diversified has turned to a team of lawyers from Alston & Bird to advise on its proposed sale to Kite Realty.
David Brown Jr., cochair of Alston & Bird’s corporate practice in Washington, D.C., is advising Inland Diversified on the deal along with REIT and real estate funds head Rosemarie Thurston, M&A coleader Justin Howard, tax partners Jennifer Weiss and James Croker Jr., real estate finance and investment coleader Allison Ryan, real estate finance partner Meryl Diamond, corporate and REIT partner Jason Goode and employee benefits partner Blake MacKay.
Oak Brook, Ill.-based Inland Diversified is part of The Inland Real Estate Group of Companies, whose longtime vice chair and general counsel is Robert Baum. Last year, Baum and several other Inland executives were named in a derivative suit filed in Illinois state court accusing them of aiding a $184.5 million Ponzi scheme, according to legal newswire Law360, which quoted an Inland spokesman in its story asserting that the filing had no merit as it represented “a fundamental misunderstanding of the REIT industry in general, and specifically the non-listed REIT industry.”
Skadden, Arps, Slate, Meagher & Flom is representing Inland’s board in that litigation. Last month the firm was a general litigation finalist for The American Lawyer’s Litigation Department of the Year, in part because of its role helping client the CommonWealth REIT win a precedent-setting Maryland state court ruling requiring shareholder disputes to be arbitrated.
The Newton, Mass.-based CommonWealth REIT, which as noted by The Am Law Daily last year is headed by former Sullivan & Worcester chairman Barry Portnoy, is currently embroiled in a fierce proxy right with activist investors seeking to take control of the $2.9 billion REIT, which they claim has been mismanaged.
This week Kirkland & Ellis entered the mix on behalf of real estate billionaire Samuel Zell as he joined Corvex Management and Related Fund Management—the latter two of which are represented by Gibson, Dunn & Crutcher—in pushing a dissident slate of directors. Corvex also hired Akin Gump Strauss Hauer & Feld investment funds partner Patrick Dooley last month to become its first-ever general counsel.
Meanwhile, another top REIT, Canada’s InnVest Real Estate Investment Trust, is fighting a similar board battle with New York-based hedge fund Orange Capital, according to Bloomberg. Orange Capital, which has accumulated a 10.2 percent stake in InnVest as it pushes for changes to increase shareholder value, announced in a press release last week that it had engaged Norton Rose Fulbright in Canada as its legal adviser.
Morton Gross, a senior commercial and real estate partner with Borden Ladner Gervais, Canada’s largest firm by head count, is an independent trustee for Mississauga, Ontario-based InnVest, Canada’s largest hospitality REIT.