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Zuckerman IPO rakes it in
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June 19, 1997: 9:59 p.m. ET
Publishing mogul raises $840 million with Boston Properties public offering
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NEW YORK (CNNfn) - Publishing mogul Mortimer Zuckerman this week added a little more money to holdings that include magazines, a metropolitan daily newspaper and a variety of real estate interests.
Zuckerman's real estate investment trust Boston Properties (BXP) went public Wednesday at 25 a share. It closed its first trading session up 1-3/4 at 26-3/4 a share before losing 1/8 on Thursday to close at 26-5/8.
Boston Properties owns office buildings in New York, Boston and Washington, D.C. Also included are nine industrial properties and two Marriott hotels. The total value of the properties is approximately $2 billion.
Analysts say Boston Properties has good growth opportunities, but say it's highly leveraged, with $800 million in debt compared to $1.9 billion in assets.
A total of 62.7 percent of Boston Properties was offered, raising $840 million. And Zuckerman himself made $240 million.
Appearing Thursday on "Moneyline With Lou Dobbs," Zuckerman said the resurgence of the commercial real estate business made this a perfect time for an IPO.
"It's an expansion of the opportunities to build a lot of buildings in a strong real estate market. We've had a bad market, particularly in office space, for the first half dozen years of the 1990s.
"As a result, there's now a real shortage of supply because companies have grown and done so well. That's especially so in the suburbs," he said.
Zuckerman said he's not expecting the commercial real estate boom to drop off anytime over the next five years. Because it was stagnant for much of the 1990s, demand for new properties accumulated over that time.
He cited that pent up demand as one of the reasons the IPO was well received. (241K WAV) or (241K AIFF)
Speaking on his publications, which include U.S. News & World Report and The Atlantic Monthly and New York City's Daily News, Zuckerman expects them to do well, but not see particularly strong growth.
"(The Atlantic Monthly's) readership does well -- we have an annual circulation of 465,000 -- but the general circulation magazine market is always tough.
"We'll break even or make a little money, but it makes an important contribution to the national dialog."
Of the three major newsweeklies (Time, Newsweek and U.S. News & World Report) he said all three are doing well in general, although they all face increased competition with television for ad revenue.
"The halcyon days for newsweeklies are behind. They'll grow at the rate of the economy, but not much faster. We were No. 1 for four years... it switches back and forth. [Time and Newsweek] are not growing much in circulation and ad revenues."
Zuckerman said the Daily News is doing particularly well, especially in the advertising arena where it's capturing a lot of revenue among what Zuckerman classifies as "middle and low-end" publications that include the Daily News and its competitors Newsday and the New York Post.
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