Bren Offers to Buy Last Irvine Apartment Shares

Saying Wall Street and banks have written off real estate investment trusts, billionaire developer Donald Bren offered Tuesday to buy the shares of Irvine Apartment Communities Inc. that he doesn’t already own for $540 million.

Bren’s Irvine Co. is offering $32.50 in cash for each of the remaining 16.6 million common shares--about 19% above Tuesday’s closing price.

The move to take IAC private was announced after the stock market closed. IAC shares closed at $27.37, up 56 cents in trading on the New York Stock Exchange.

Irvine Apartment Communities is Orange County’s largest landlord. As of Sept. 30, it owned or had under development 62 apartment communities with 18,758 units, mostly in the county.

The Irvine Co., 100% owned by Bren, converted its apartment holdings into publicly held IAC in 1993 and now wants to take them private again.

Through stock and partnership interests, Irvine Co. already owns 63% of IAC. Bren also has been a big buyer of IAC stock this year, believing that it is undervalued by Wall Street standards. The Irvine Co. has purchased 1.74 million IAC shares since January, nearly 10% of its shares outstanding, according to Securities and Exchange Commission filings.

Irvine Co. said it can better finance the capital-intensive development and operation of apartments through its own lenders instead of the bank and Wall Street sources available to IAC as a public real estate investment trust.

IAC in recent years has expanded beyond its core business on Orange County’s Irvine Ranch by buying and developing high-end apartments in Silicon Valley, northern San Diego County and Los Angeles.

A committee of IAC directors unaffiliated with Irvine Co. will consider the offer.

Like all REITs, IAC is required to hand over 95% of its net income to shareholders in the form of dividends. For Bren, that dividend stream has amounted to more than $43 million a year.