Bank of America Investment Banking Pitch Book
Selected Wall Street Research Reaction to BOREAS'
1/19/16 Proposal
Wall Street expects BOREAS to raise its bid...
"The $17 per share offer is the opening bid in a potential M&A negotiation
between [BOREAS] and [RHO], in our view." -Stifel 1/19/2016
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"Should negotiations continue, we would expect the next bid, if [BOREAS]
is seriously inclined to acquire [RHO], to be in the $19+ range and as such
remain buyers at current levels." - Canaccord 1/19/2016
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"Based on our NAV estimate of $19.28 (lower than consensus around
$20), we believe that the [RHO] Board could force [BOREAS) to sweeten its
bid to around $18 per share."-Boenning & Scattergood 1/19/2016
...and view BOREAS as motivated to increase its
management fees and become a retail peer consolidator:
"Thus in the event that [RHO] rejects the initial bid there is the potential
that [BOREAS] increases its bid slightly." - Green Street Advisors
1/19/2016
"[BOREAS] likely saw an opportunity to roll [RHO) into one of its real
estate funds thus increasing its asset management fee stream."
- Green Street Advisors 1/19/2016
"[BOREAS) could use [RHO) as a platform to consolidate the 'B' mall space,
providing [RHO] with the needed capital to acquire and redevelop the
portfolio, achieving excellent risk adjusted returns on capital of 8%-10%."
- Boenning & Scattergood 1/19/2016
Source: Wall Street Research as of February 2, 2016.
5
Preliminary, Subject to Further Review and Revision
Bank of America
Merrill Lynch
Lower productivity malls are out of favor with investors...
"The takeover proposal is timely as most institutional investors have
cooled on "B" malls amid concerns over sluggish retail sales, bankruptcies,
and store closures. Over the past year, "B" mall shares have fallen 37.7%
as a group, dragging [RHO] down 32.0% with them."
- RBC Capital Markets 1/19/2016
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"Market share for physical retail is shrinking; tepid tenant sales growth is
expected ("1% -2%)...eCommerce is growing at a much faster pace than
brick & mortar, and should continue to do so for the foreseeable future.
The faster pace of growth creates a drag on the sales growth available at
physical stores...the dragon mall sales growth could be as much as 300
basis points annually in the coming years."
- Green Street Advisors 1/26/2016
...However, RHO's story has strong momentum:
"[RHO] has done a good job, managing the portfolio, in our view. (RHO)
has increased occupancy, grown NOI, and is focused on executing on its
$380 million redevelopment pipeline to drive future growth."
-Stifel 1/19/2016
"[RHO] story very much intact. Despite the recent stock volatility, we are
supporters of the [RHO) value-add story and in particular the high
concentration of California malls, which is unique among [RHO]'s B-mail
peer group and provides strong NAV downside protection."- Canaccord
1/19/2019
"[RHO] has proven to be a sound operator of B and C malls achieving
steady improvements to portfolio quality in recent years. Same property
NOI growth is outpacing its low productivity peers for '15 and with full
year NOI growth estimated to be 3.3 % (vs. the flat NOI growth expected
from low end peers)."- Green Street Advisors 1/19/2016View entire presentation