Schottenstein Seeks Burnham Pacific REIT

A retailer that owns 8.2% of San Diego-based Burnham Pacific Properties Inc. has offered to buy the rest of the real estate investment trust’s stock for $13 a share.

Documents filed Monday with the Securities and Exchange Commission details Columbus-based Schottenstein Stores Corp.’s proposed acquisition of Burnham Pacific for $565 million. Schottenstein also would assume $576 million in Burnham Pacific debt.

In a letter to Burnham Pacific’s board of directors, included in the filing, Schottenstein Chairman Jay Schottenstein said the acquisition of the stock “underscores our commitment to this transaction.”

Burnham Pacific Chief Executive J. David Martin said in a statement that the company is studying the proposal.

“The company will review this proposal to evaluate whether it is in the best interests of our company and our shareholders,” the statement said.

Officials from both companies would not comment further, but one analyst questioned whether it would be a good match.

“This would be a little bit like Wal-Mart buying Neiman Marcus,” said Burl East, an analyst with Everen Securities in San Diego.

East said Schottenstein is known as an off-price retailer while many malls Burnham Pacific runs are upscale, high-quality centers in urban markets.

But analyst Janet Campbell of Sutro & Co. in San Francisco said the move would give Schottenstein entry into the California market.

Campbell and East said Burnham may want more money.

“I think $13 doesn’t come close,” East said.

Campbell said the proposal shows many real estate investment trusts continue to be seen as a good value to investors after a big drop in their stock prices last year.

News of the proposal sent Burnham Pacific stock up $1.50 to $12.62 in heavy trading Monday on the New York Stock Exchange.

Burnham Pacific owns and manages nearly 90 properties, primarily in California and the western United States. The properties include shopping centers and strip malls.