ATLANTA, GA - No one wants to buy Atlanta-based Post Properties. So the builder of multifamily communities announced Wednesday that it has ended its five-month quest to be purchased. "We conducted an open and thorough sales process, but conditions in the economy and the financial markets combined to produce a difficult transaction environment," Post President and Chief Executive Officer David Stockert said in a release.
The company's financial adviser contacted numerous potential buyers, including pension funds, foreign capital providers, public and private multifamily companies, and large conglomerates, Post said in its announcement. And several potential bidders showed interest, but none submitted a definitive proposal, Post said. The company would not comment beyond its announcement.
Haendel St. Juste, an analyst with Green Street Advisors in Newport Beach, Calif., who follows Post, said the company's development pipeline is a concern. The cost of current and planned developments is higher than what those properties will be worth when finished, St. Juste said. Post's development pipeline, he said, totals about $1.1 billion.
A number of other factors have worked against Post, St. Juste said, including the high cost of construction and the prices Post paid for land when competing against condo builders. Land prices have since declined in the housing slump. Money for a deal as large as the purchase of Post also is more difficult to come by today. And capitalization rates are trending upward, St. Juste said, which means asset values are declining.
Post announced in January that it would explore a sale after receiving an unsolicited written proposal from Cadim and Williams Realty Advisors LLC to buy the company for $44 to $47 a share in cash. Williams Realty is controlled by John Williams, Post's founder and former chairman and chief executive. Cadim is a division of Caisse de depot et placement du Quebec. Williams stopped participating after that initial offer.
"Once people got in under the Post kimono they realized there were some issues going on," St. Juste said. Williams retired as CEO at Post in 2002 and left its board in 2003 in a bitter dispute over management of the company. Post shareholders rejected Williams' bid later that year to regain control of the company.
Post's stock closed Wednesday at $33.01, up 15 cents, on the New York Stock Exchange. Last summer, Post was trading at more than $50 a share. Post Properties owns 22,437 apartment homes in 62 communities. The company is also developing and selling 535 condominiums in four communities.
Source: Atlanta Journal-Constitution