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ought to be on was the equity side,
The trust moved its headquarters '
rather than the debt side."
from New York to Southfield. The
Ramco-Gershenson had been one
trust owns, develops, acquires and
of RPS's good loans back in 1982.
manages regional malls, community
Ramco-Gershenson had looked into
shopping centers and single-tenant
reorginization through an IPO, but
retail properties nationally.
had backed away from that option
For its part, RPS contributed $68
because of the amount of money
million (raised by converting their
required and the risks involved.
mortgages into cash) and its six retail
So now, on one side of the table sat
shopping centers to the partnership.
RPS, a lender that Ramco-Gershenson
The funds were used to retire a por-
had worked with that now wanted to
tion of the debt on the Ramco proper-
become an equity REIT. And sitting
ties.
directly across from them was Ramco-
"We faced the same realities as did-
Gershenson, which wanted to become
so many other real estate
a publicly owned company. What else
developers/owners/managers, which is
could they do but negotiate?
that the rules of the game changed on
Shareholders
us dramatically
of RPS Realty
in an extremely )
Trust knew the
short period of
company was
time," said
saddled with a
Gershenson.
number of non-
"Leverage
producing realty
went from
loans. And RPS,
being a most
with only six
desired attribute
shopping cen-
to being some-
ters, was far
thing that
from having a
became very
large portfolio
difficult to get
Dennis Gershenson and his brothers have
of income-gen-
rid of. And
seen growth.
erating proper-
obviously the
ties. Nor did
public market..._\
RPS have a highly skilled and experi-
place was an outstanding way to de-
enced management team to guide it
leverage the assets. We had the oppor-
into becoming an equity REIT.
tunity to seize this situation and then
Ramco-Gershenson had both.
to convert to a public format. It made -_'
The shareholders of RPS approved
all the sense in the world."
the acquisition of Ramco-Gershenson
One day, Ramco-Gershenson wasn't
through the creation of an umbrella
even there. And the next day they
partnership real estate investment trust
were — as a full-blown, up-and-run-
(UPREIT) named Ramco-Gershenson
ning equity REIT.
Properties, L.P., a Delaware limited
At the time of the reverse merger,
partnership. It became the operating
the combined Ramco-Gershenson
partnership and owner of the assets of
UPREIT had a portfolio of 28 shop-
the company.
ping centers in eight states: Michigan,
An UPREIT also has the tax advan-
Ohio, Wisconsin, New Jersey, New
tages of a REIT. Essentially, when you
York, Florida, Maryland and
start a REIT and contribute your
Delaware. It has since acquired six
property to it, you can avoid a taxable
more, giving it a total of 34 shopping
transaction.
centers with approximately 6.9 million
With the approval of the RPS
square feet of gross leasable area, and a
shareholders, RPS simultaneously con-
presence in Georgia as well.
verted to an equity REIT, which
Ramco-Gershenson Properties
became Ramco-Gershenson Properties
Trust's 1996 revenue was $40.5 mil-
Trust.
lion. Even their rivals have good
"What happened is that, in putting
things to say about Ramco-
the organization together, when the
Gershenson, which is somewhat of a
transaction was done, all of the exist-
rarity in the highly competitive world
ing officers and employees of the exist-
of commercial real estate. "They have
ing public company (RPS Realty
done an excellent job of operating
Trust) either retired or quit, so that
some of the premier properties in the
our organization took over all of the
Detroit market, as well as in Toledo,"'\
roles of the public company, lock,
said Joseph Swolsky, owner of Toledo-
stock and barrel," said Dennis
based Park West Realty.
Gershenson.
MERGER on page 208