Pacific Gulf Properties Inc., frustrated by a weak stock price that has hampered its ability to raise funds, disclosed plans Friday to sell all of its real estate holdings and liquidate the company.
The Newport Beach real estate investment trust is asking its shareholders to approve the sale and liquidation at a meeting, yet to be scheduled, according to a document filed with the Securities and Exchange Commission.
News of the plan sent the company's stock to a 52-week high of $26.44 a share, up 13 cents in New York Stock Exchange trading.
Pacific Gulf executives have been frustrated by the gap between what the public is paying for their shares and the private market values for real estate.
Pacific Gulf said any liquidation would depend on several factors, including the amount of money raised from the sale of its assets and other liabilities the company must repay.
On Friday, the company said it has agreed to sell seven multifamily properties to three separate buyers for about $92.9 million, including the assumption and repayment of $31.7 million in debt.
The sale was the second large batch of properties the investment trust plans to turn into cash. In June, it agreed to sell its portfolio of industrial properties to CalWest Industrial Properties LLC for about $929 million in cash and assumed debt.
The company, which had revenue of about $67 million for the six months ended June 30, will continue to offer for sale three apartment properties containing 492 units.
In its SEC filing, Pacific Gulf said that for the last few years, it has seen "ongoing weakness" in trading prices of REIT stocks, despite strong financial results at companies like Pacific Gulf. That has kept their market capitalizations low and has limited their ability to raise financing.
At the same time, "our robust economy was creating greater competition for the acquisition of real properties, driving real estate prices upward," the document said.
The upshot for Pacific Gulf and other REITs has been that their parts are more valuable to shareholders than the whole, the company said in the document.
"By selling our properties to interested real estate buyers and distributing the proceeds to our shareholders, we stand to realize the full market value of these properties for our shareholders without incurring any discount to those values that may be implied by our [stock price]," the company said.