Two Burnham Real Estate Trusts to Be Merged Pending Approval
Two publicly traded real estate investment trusts affiliated with John Burnham & Co. of San Diego will be merged into one trust, pending approval by shareholders and by the Securities and Exchange Commission, Burnham officials said Wednesday.
Burnham Pacific Properties and Burnham American Properties--both of whose shares are traded on the American Stock Exchange--will be combined through a statutory merger into an entity that will retain the Burnham Pacific name, according to Louis Garday, president of both trusts. The new REIT will have assets of about $82 million.
“In the wake of the stock market crash last fall, the investment community told us that it’s better to have one medium-sized REIT than two small REITs,” Garday said in explaining the merger. He said shareholders will save from one to two cents per share per year in reduced administrative costs through the merger.
About 846,000 Burnham Pacific shares will be exchanged for all the 972,000 shares outstanding of Burnham American, a ratio of 0.87 to 1. Total post-merger shares of Burnham Pacific will total about 2.3 million. A source said that shareholders in the new entity can expect a annualized dividend of about $1.24 per share over the next year.
With assets of $63 million, Burnham Pacific paid its shareholders dividends totaling $1.125 per share during the 12 months ended Dec. 31. Burnham American, which has assets of $19 million, paid out $1.11 per share in dividends in 1987, Garday said.
Trading in the two trusts was suspended by the American Stock Exchange on Wednesday. Burnham Pacific shares closed unchanged in Tuesday trading at $17.75, while Burnham American closed down 25 cents at $15.75 per share.
Both REITs formerly were publicly traded real estate limited partnerships that were converted to REITs last year to take advantage of changes in the tax laws. Combined, the two entities own 14 commercial real estate properties in San Diego County and one hotel in Los Angeles.
