NEW YORK (TheStreet) -- Wednesday Brixmor Property Group (BRX) lists 37.5 million shares priced at $20 a share on the New York Stock Exchange, but I'm not buying it. It's a whale of an IPO, but Brixmor has a boat load of risks that cause that sinking feeling.The massive offering of 37.5 million shares could allow the shopping center REIT to reel in around $800 million in equity and provide investors with a highly diversified portfolio of 522 shopping centers totaling around 87 million square feet. It's expected that the Brixmor IPO capitalization will be one of the biggest equity raises this year and the newfound liquidity will push the equity REIT into an enviable first-place lead as the largest shopping-center REIT in the nation (based on GLA) and the third-largest shopping center REIT based on market capitalization (expected to be around $6 billion) -- behind Kimco Realty ( KIM) and Federal Realty ( FRT).
The dividend consumes close to 100% of the funds available for distribution and one wrong move could force a dividend cut. I also see that Brixmor did not obtain independent third-party appraisals, valuations or fairness opinions or conduct arms-length negotiations with the sponsor with respect to the terms of the IPO property transfers. ROIC), Excel Trust ( EXL), DDR Corporation ( DDR) and Inland Real Estate ( IRC). For less glamour and more safety, I like Federal Realty Realty, Kimco Realty, and Weingarten Realty ( WRI). Owning Brixmor today is not what I consider to be a "sleep well at night" REIT. With a 98% dividend payout, the distributions are under pressure and unless the occupancy rate can be increased, the shares are exposed to moderate risk. The company's debt profile also needs to be smoothed and the management team must provide a few quarters of performance. In summary, Brixmor is not in my shopping cart. I'll wait for the blue light special. Check out my monthly REIT newsletter, The Intelligent REIT Investor. At the time of publication, Thomas was long ROIC, O, ARCP, STAG, CSG, UMH, DLR, HTA, VTR and GPT, although positions can change at any time. Follow @swan_investor