WP Glimcher, a premier retail real estate investment trust specializing in the ownership, management and development of shopping centers, today announced the successful completion of the formation of its joint venture with O’Connor Mall Partners, L.P., an affiliate of O’Connor Capital Partners.
As a result of the transaction, O’Connor now has a 49% interest in the joint venture and WP Glimcher retains a 51% interest. The joint venture resulted in approximately $430 million of cash received by O’Connor, as well as a reduction in WP Glimcher’s debt levels of approximately $800 million. This reflects the aggregate value of the properties of approximately $1.625 billion, less the mortgages secured by such properties at closing, plus costs spent to date on Phase III development at Scottsdale Quarter. This pricing implies a capitalization rate of 5.25% on in-place net operating income.
Proceeds from the transaction have been used to repay a portion of WP Glimcher’s bridge loan used to finance the acquisition of Glimcher Realty Trust, which was completed in January 2015. WP Glimcher plans to repay the remaining balance of the bridge loan with the proceeds from a new, 5-year $500 million term loan, which is expected to close during the second quarter of 2015.
“We are pleased to announce the completion of the formation of the joint venture with O’Connor Capital Partners, which allows us to continue to manage and retain majority ownership of the five properties,” said Chairman Mark Ordan. “We remain focused on maintaining a strong, investment grade balance sheet and this transaction is one example of how we are accomplishing that in the near-term.”
The five properties in the joint venture are: The Mall at Johnson City in Johnson City, Tennessee; Pearlridge Center in Aiea, Hawaii; Polaris Fashion Place® in Columbus, Ohio; Scottsdale Quarter® in Scottsdale, Arizona; Town Center Plaza (which consists of Town Center Plaza and the adjacent Town Center Crossing), in Leawood, Kansas. WP Glimcher will continue to lease and manage the properties. In addition, redevelopment costs associated with the properties will now be a shared expense between the two companies.
WP Glimcher was represented by Eastdil Secured LLC, and Wachtell, Lipton, Rosen & Katz served as legal advisor to WP Glimcher. Neal, Gerber & Eisenberg LLP served as legal advisor to O’Connor.