Irvine Apartment Communities OKs $569-Million Offer

Irvine Apartment Communities Inc. on Tuesday accepted a higher bid from a company run by its chairman, billionaire Donald Bren, after some investors and analysts said Bren’s initial offer was too low.

The Newport Beach-based apartment developer said it reached an agreement to sell the 83% of the company not owned by Bren for $34 a share in cash, or $569 million. The new price is 4.6% higher than Bren’s initial offer of $32.50 a share in December.

Shares of Irvine Apartment, a real estate investment trust, rose 94 cents to close at $33 on the New York Stock Exchange. The shares are up 21% since the first offer was made Dec. 1. Bren is making the offer through a unit of his Irvine Co.

“We are pleased with the terms of the merger agreement, which delivers superior value to all [company] shareholders,” William McFarland, chief executive and a director, said in a statement.

Irvine Co. owns and is developing California’s Irvine Ranch in Orange County, the nation’s largest master-planned community. Irvine Apartment has the exclusive right to develop apartments on the ranch.

In all, Irvine Apartment owns 18,758 apartment properties. The company was spun off from Irvine Co. in 1993. Its properties are owned through a partnership with Irvine Co., which owns a 55% stake in the partnership. Irvine Co. also owns 3.4 million of Irvine Apartment’s 20.1 million shares.

Bren’s offer came amid an 17% drop in REIT stock prices last year, which made it difficult for companies to finance acquisitions and grow. Irvine Co. officials said they could more easily finance the company and expand its business if it were closely held.

After Bren made the initial bid, some investors complained it was too low. Irvine Apartment then formed a special committee of directors, headed by Anthony Frank, a former U.S. postmaster general, to evaluate the offer to take the company private.

The sale is subject to the approval of investors owning at least two-thirds of Irvine Apartment’s shares. The transaction is expected to be completed either late in the second quarter or early in the third.