Insider grabs bargain

South Florida CEO,  Oct, 2004  by Jaclyn Alcantara

• E-mail
• Print
• Link

Riley Property Holdings LLC announced it will pay $3.8 billion to acquire Miami Beach-based real estate investment and management company LNR Property Corp., in a transaction that would take LNR private. The deal calls for Riley Property to pay $63.10 for each outstanding LNR share. LNR CEO Jeffrey Krasnoff will remain CEO at the new company, which will operate under the LNR name and stay headquartered in Miami Beach. Riley is majority owned by New York-based Cerberus Capital Management LP, which most recently formed a partnership with Boca Raton-based Sun Capital Partners Inc. to acquire department store chain Mervyn's. Donald D. Destino, managing director of San Francisco-based JMP Securities, says Cerberus "got a spectacular deal. The LNR franchise is conservatively worth $70 to $75 a share or more." LNR chairman Stuart A. Miller (CEO of Miami-based homebuilder Lennar Corp.) will purchase a 20.4 percent share in Riley. Destino speculates that Miller, who controls approximately 77 percent of LNR stock, wanted to take the company private and agreed to divest his holdings to later buy back in at the bargain price. "I don't think common shareholders would have approved a $63.10 acquisition price ... this franchise is worth a lot more than $63," Destino says. He expects the company to sell some of its non-core assets once the merger is completed at yearend or early 2005. LNR was spun-off from Lennar in 1997.

[ILLUSTRATION OMITTED]

COPYRIGHT 2004 CEO Publishing Group, Inc.
COPYRIGHT 2004 Gale Group