Burnham Pacific Properties, Inc., has taken the first steps toward permanently closing up shop. The San Diego-based real estate investment trust (REIT) celebrated Labor Day by cutting 46 jobs and closing offices in Portland, Seattle and Sacramento.
Axing employees is all part of Burham’s grand plan to liquidate the company. It hopes to gain shareholder approval of a final liquidation plan Oct. 18.
“Today’s announcement demonstrates our commitment to reduce operating expenses, reorganize our management efforts and maximize shareholder value,” said Scott Verges, interim CCEO. “Now that our board of directors has concluded its consideration of strategic alternatives and recommended a liquidation of the Company’s assets, it is time for us to focus on cutting operating costs and preserving asset values.”
Strangely enough, at least one media outlet is reporting that Burnham (NYSE: BPP) is in talks with Developers Diversified Realty (NYSE: DDR), an Ohio-based REIT that has offered to take over one-third of Burnham’s assets. The other two-thirds of the company’s 50 community shopping centers would be liquidated. Last Thursday, a day before the layoff announcement, TheStreet.com reported that the “on-again, off-again” deal seemed to be on again.
Whether this report is accurate or not, Street reporter Christopher Edmonds was accurate in his characterization of the deal being “likely to please many fuming shareholders.”
Shareholders are understandably upset with Burnham, whose shares were near $12 a year ago. The stock price has slipped below $5 in recent weeks, with last week’s announcement producing a bounce to around $6 per share. This is particularly galling to shareholders siding with Ohio retailer Jay Schottenstein, who offered $13 a share for the company last year. Management turned him down flat.
Despite hopes of a deal, however, to all appearances Burnham will move forward with its liquidation plan, which is expected to yield less than $7 a share.
Last Friday, the company also announced the termination of its venture with California Public Employees' Retirement System (CalPERS), under which Burnham served as CalPERS’ real estate advisor.
To account for the layoffs, Burnham will take a restructuring charge of $4.1 million in the third quarter. The moves are expected to generate cost savings of about $6 million per year, reducing general and administrative expenses by almost half.
Of course, it doesn’t take much G&A to carve up your company and sell it.
In other news, if you’re in charge of managing real estate facilities, check out the Web site FacilityPro.com. The e-commerce company offers a Web-based procurement solution for maintenance, repair and operations products and services.
The site recently added waste management to its list of services, allowing customers to get bids from Oakleaf Waste Management, LLC, via the Internet.
“Bringing Oakleaf’s waste management solutions online at FacilityPro.com is a strategic step for both companies,” said Peter Dunning, FacilityPro.com president and chief executive officer. “It has always been our goal to add truly integrated sourcing for all services needed by owners and operators of commercial real estate, and this is the first step.
“There are plenty of [business-to-business] marketplaces that provide a listing of service providers, much like a glorified phone book directory. What we are offering is the ability to source a service and streamline the management process through consolidated invoicing and reporting,” he added.
Oakleaf directs the entire bidding process, including surveying the locations and developing the bid specifications; soliciting and obtaining a minimum of three bids from reputable haulers, contracting with the customer for each of their locations using the lowest price and the best quality provider, and requesting and notifying cancellation of existing service agreements.
Published: September 8, 2000
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