Latest REIT Merger Pairs Camden, Summit

Camden Property Trust and Summit Properties Inc. will combine in a $1.9 billion deal, amounting to the fourth REIT merger of 2004. It is the first this year between public multi-family companies, although in September United Dominion Realty Trust bought 4,654 apartment units from Essex Property Trust Inc. for $756 million.

The more recent merger was announced after the close of business yesterday. The combined entity will have a $2.9 billion total market capitalization, making it the fifth largest public multi-family company in the United States.

According to the terms of the deal, Camden will assume Summit's debt and purchase its outstanding shares for $31.37 per share. Summit's stock closed trading yesterday at $27.84 per share and was up to $30.72 on news of the merger.

Bank of America Securities analyst Ross Nussbaum had previously put Summit on a list of 10 potential acquisition targets. Nussbaum wrote in a report that the REIT's strong presence in Florida and Washington, D.C., made it attractive to other REITS trying to penetrate those markets. Nussbaum also wrote that he expects apartment REIT stocks to rally in the coming days as a result of the merger.

Prudential Equity Group REIT analyst James Sullivan upgraded Summit and downgraded Camden after the deal was announced.

"(Camden) management estimates that after the transaction the company will have a $1.1 billion development pipeline, the largest in the sector," Sullivan wrote. "We regard this as a risk given rising construction costs and sluggish occupancy and pricing trends in the sector."

The merger is expected to close in the first quarter of 2005.

Camden will form a subsidiary after the merger to sell up to $500 million worth of properties.

Other major REIT mergers this year have included Simon Property Group and Chelsea Property Group; General Growth Properties Trust and Rouse Co.; and ProLogis Trust and Keystone.

Neither Camden nor Summit returned calls seeking comment on the merger.