A New Jersey-based bank is entering the Jacksonville market by acquiring CNLBancshares Inc., which has three branches in Northeast Florida. But its CEO seems to be unfamiliar with the market.
Valley National Bancorp last week announced the agreement to buy Orlando-based CNL for $207 million in stock. CNLBank has 16 branches throughout Florida, including offices in Jacksonville, Ponte Vedra Beach and St. Augustine.
“CNL brings us attractive markets in Jacksonville, Orlando, Sarasota, Fort Myers and Naples,” Valley Chairman and CEO Gerald Lipkin said in a conference call with analysts.
“Each of these markets shows strong population growth and strong economic growth, so we’re excited about that,” he said.
However, Lipkin showed that maybe he hasn’t visited the Jacksonville area by mispronouncing “Ponte Vedra” as he detailed the three offices in Northeast Florida. It was something along the lines of “Pohnta Veydra.”
Still, Valley is making a big commitment to Florida, as CNL is its second acquisition in the state in the past year. The company last year acquired Boca Raton-based 1st United Bancorp Inc., which had 21 branches in Southeast and Central Florida, for $312 million.
Lipkin said the integration of 1st United has “met or exceeded” the company’s objectives.
Before that deal, Valley was focused on the New York metropolitan area. Aside from its Florida offices, it has 161 branches in northern and central New Jersey and 43 in New York City and Long Island.
“It’s our strategic vision at Valley to create what I like to refer to as a three-legged stool covering New Jersey, New York and Florida,” Lipkin said.
He hopes Valley can grow from about $20 billion in assets when it completes the acquisition of CNL to $25 billion, with one-third of its base in Florida.
Valley’s Florida strategy seems like a throwback to the 1980s, when interstate bank mergers were first allowed and many New York banks were anxious to get into Florida’s lucrative markets. Of course, many Florida cities are populated with retirees and snowbirds who fled the New York area.
“It’s interesting how many of our clients have homes in two or more of our markets,” he said.
Valley is hoping to complete the CNL acquisition in the fourth quarter this year.
Analyst downgrades Regency Centers
Credit Suisse Securities analyst Ian Weissman downgraded his rating on Regency Centers Corp. from “neutral” to “underperform” last week, mainly because the Jacksonville-based shopping center developer has been outperforming its peers recently.
“Regency is a high-quality company and management team, but we think its current relative valuation more than reflects that. The company posted fine first-quarter results, but not necessarily any better than what we were expecting,” Weissman said in a report.
The downgrade was part of an overall re-evaluation of real estate investment trust stocks by Credit Suisse analysts.
Regency has produced a total return (stock price appreciation plus dividends) of 3.1 percent so far this year, while the entire group of “strip REITs” covered by Credit Suisse has produced a negative return of 1.4 percent. However, Weissman is projecting Regency’s total return to be about 6 percent over the next 12 months, below the firm’s forecast for other strip REITs.
“Looking forward, one thing we have a hard time with is figuring out what the identifiable catalyst for Regency will be to drive outperformance,” he said.
“While they are great developers, we don’t see Regency either ramping up their development pipeline going forward nor do we see them driving outsized earnings/net asset value growth in the existing pipeline,” he said.
While Regency’s stock may lag, SunTrust Robinson Humphrey analyst Ki Bin Kim sees the overall outlook for shopping center REITs as very strong.
“Landlords, tenants and brokers all sounded exuberant regarding retail real estate demand. Development and redevelopment seemed to be high on people’s minds given the amount of new store openings planned by retailers,” Kim said in a research note after attending an International Council of Shopping Centers conference.
“While we haven’t seen significant development creep back into the sector, based on our conversations, we think it has become a more likely prospect compared to last year,” he said.
Black Knight IPO nets $479 million
Black Knight Financial Services Inc. last week said that the underwriters of its initial public offering exercised their option to purchase 2.7 million additional shares of stock. That means Black Knight sold a total of 20.7 million shares in the IPO at $24.50 each.
The Jacksonville-based mortgage technology and analytics company received about $479.3 million in proceeds from the offering after underwriting fees.
The shares sold in the IPO were Class A shares. Fidelity National Financial Inc. retains majority voting control of Black Knight after the sale through ownership of nearly all of Black Knight’s Class B shares, which have greater voting power than the Class A shares.
According to the final prospectus issued by Black Knight for the IPO, Fidelity has 54.5 percent of the voting power of the company.
Black Knight’s stock received a strong reception on Wall Street, trading above its IPO price since the stock hit the market on May 20 and reaching as high as $28.72 last week.
Fenix IPO gets mixed reception
Another IPO with ties to Jacksonville had a more mixed response from its stock sale last month.
Fenix Parts Inc. went public by selling 13.8 million shares of stock at $8 each, which was lower than its hoped-for price range of $9 to $11 a share.
On the bright side, the stock has traded higher since it hit the market three weeks ago, trading as high as $10.90.
Fenix is a Miami-based company that operates eight businesses engaged in the recycling and resale of automotive products, including a Jacksonville company called GO Auto Recycling.
The company’s executives owned 45 percent of the company before the IPO but after selling shares to the public, the officers’ stake was reduced to 13.2 percent, according to its prospectus.
Fenix trades on the Nasdaq Global Market under the ticker symbol “FENX.”
SunGard Data considering IPO
Another company with local ties is considering an IPO, but it hasn’t filed any plans yet.
Pennsylvania-based SunGard Data Systems Inc. announced last month that its parent company, SunGard Capital Corp., is considering an IPO this year, but gave no other details.
SunGard made the announcement after The Wall Street Journal and other financial news outlets reported an IPO may be in the works.
SunGard was formerly publicly traded but was acquired by a group of private equity firms for $11 billion in 2005. According to the Journal, that deal ushered in a new wave of big buyouts that only lasted a couple of years before the financial crisis shut down that market.
The Journal story said SunGard is looking at a market value of about $7 billion in its IPO.
SunGard is a financial software company with annual revenue of $2.8 billion. It has had operations in Jacksonville since acquiring a local computer services firm called Corbel & Co. in 1996.
Flowers Foods reported interested in more Hostess brands
Two years after acquiring Hostess Brands Inc.’s bread business in a bankruptcy court auction, Flowers Foods Inc. may be interested in adding Hostess’ snack cake business, according to a report in the New York Post last week.
When Hostess’ businesses were sold off by the court, the snack cake business, including the iconic Twinkies brand, was bought by a private equity group led by Apollo Global Management for $410 million. Now that group is looking to profit by selling the business for about $2 billion, with Flowers one of the bidders, the Post said.
That report came out the same day as Flowers’ first-quarter earnings report, so an analyst asked CEO Allen Shiver about it during the company’s conference call. Shiver declined to comment.
Thomasville, Ga.-based Flowers, which already operates one bread bakery in Jacksonville, acquired a Hostess bakery on the Northside and 19 other Hostess bread facilities.
It has not done anything with the former Hostess bread bakery at 201 Busch Drive E., which employed 128 people when it was shut down in 2012 as Hostess filed for Chapter 11 bankruptcy.
Flowers reported earnings for the first quarter ended April 25 were unchanged from last year at 29 cents a share. Sales fell 0.7 percent to $1.15 billion.