Buyout Fund Contemplates a REIT Turn
Richard Baker, a big investor in shopping centers and retailers, raised $400 million in 2007 for a "blank-check company" that would buy operating businesses like restaurants and casinos. But he didn't do a deal as the economy fell off a cliff.</br></br>Now he has another strategy that is being watched closely in the real-estate industry. Instead of returning the money -- which he would be required to do soon if he didn't spend it -- Mr. Baker wants to convert the company, named NRDC Acquisition Corp., into a public real-estate investment trust. The new company, named Retail Opportunity Investments Corp., would be geared toward buying retail properties from distressed owners.</br></br>The move is the latest sign real-estate investors are looking to the public markets for capital at a time banks are reluctant to lend and private capital is scarce. The strategy has paid off for many. Investors have bought more than $15 billion in REIT secondary stock sales so far this year.</br></br>Several companies have completed initial public offerings to raise money to invest in distressed real-estate debt, including Starwood Capital Group LLC's $810 million IPO last month. But Mr. Baker's attempt is different from these "mortgage REITs" because he would focus on buying actual properties -- specifically, supermarket-anchored strip shopping centers on the East and West coasts of the U.S. -- rather than the debt behind them.</br></br>If successful, Mr. Baker's attempt could set the stage for other companies to ask stock-market investors to fund blind pools for investing in shopping centers, warehouses, office buildings and other kinds of commercial real estate whose owners face loan defaults.