Developer, Calif. REIT will merge

Manekin and AMB expected to announce $150 million deal today

City renaissance player

Local control will end for development firm, latest to join a trust

Commercial real estate

February 10, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Manekin Corp. is expected to announce a merger this morning with a San Francisco-based real estate investment trust, ending local control of a company that was a key ingredient in Baltimore's renaissance four decades ago.

Manekin's plan to link with AMB Property Corp. -- a complex deal valued at $150 million -- is the most significant alliance in a series of transactions between private local real estate firms and Wall Street-financed property owners.

"We like to partner with local experts and that's how we view Manekin," Christine G. Schadlich, an AMB vice president of investor relations, said yesterday. "They are strategically important in that area and they're great people. And this is consistent with our alliance strategy."

Manekin is one of Maryland's largest property developers, with a portfolio of more than 5 million square feet of commercial space. The deal with AMB is expected to allow the company to compete effectively and increase its ability to attract capital.

Manekin will sell half its operating company -- comprising development, leasing, property management and construction services -- and a bundle of retail and industrial properties to AMB, sources said yesterday.

The link with AMB also ends a more than two-year search by Manekin to find a suitable partner. Manekin had developed projects with Copley Real Estate Advisors of Boston, until the pension fund adviser bailed out of real estate four years ago. The Manekin/Copley team has developed more than $400 million worth of space since 1981.

For AMB, the deal is significant because it is the first time that the California REIT has merged with a company. In the past, AMB has preferred to acquire properties alone or has linked with companies such as the Trammell Crow Co. or the Lefmark Group on a limited basis to acquire and develop projects.

Officials at Manekin, which helped conceive and develop Charles Center downtown, declined to talk about the transaction yesterday. A news conference with executives from both companies to announce the corporate marriage is scheduled for this morning.

Manekin thus will become the latest local developer to merge with a REIT in the Baltimore area. In the past two years, Questar Properties, Baltimore Gas and Electric Co. subsidiary Constellation Real Estate Group Inc. and Riparius Development Corp. all have struck deals aimed at strengthening their opportunities in a consolidating real estate industry.

"It unleashed us," said Randall Griffin, president and chief operating officer of Corporate Office Properties Trust, a Philadelphia REIT that merged with Constellation last year in a $204 million deal. "It allowed us to aggressively go out and do what we were capable of doing, and it allowed us to grow and expand dramatically."

Manekin is expected to have the same ability with AMB, a former pension fund advisory firm that went public in 1997. Locally, the company owns a five-building project known as Techwood at Baltimore-Washington International Airport.

In all, AMB owned 620 industrial and office buildings at the end of last year, totaling 63.6 million square feet and valued at $3.5 billion.

"The company has good asset quality, a diverse portfolio, a conservative capital structure and a good debt-coverage ratio," said Elizabeth Campbell, an analyst at S&P Ratings Services who tracks AMB. "They had a successful history as a manager and adviser, and their management has conservative policies that have helped them grow but avoid some mistakes."

Pub Date: 2/10/99

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