OAK BROOK, IL—Retail Properties of America Inc. said Monday afternoon that it was buying out its joint-venture partner, a state pension fund, in a portfolio of six shopping center properties totaling 1.2 million square feet. The JV’s value is $292.5 million, with the JV partner’s 80% interest valued at $234 million. The deal is expected to close in June.
Steve Grimes, RPAI’s president and CEO, says the deal “will enhance our presence in our target markets with high quality multi-tenant retail assets demonstrating strong demographic profiles and long-term growth potential. Additionally, this transaction further simplifies our balance sheet, as we will have no remaining investment property unconsolidated joint ventures.”
The JV has been on RPAI’s books as the MS Inland Fund since 2007, when the company was still known as Inland Western Retail Real Estate Trust, a name it shed in 2012. In buying out its partner’s interest in the portfolio, RPAI will assume the JV’s $142.2 million of in-place mortgage financing at a weighted average interest rate of 4.79%.
The JV portfolio includes Huebner Oaks Shopping Center in San Antonio; Gardiner Manor Mall in Bay Shore, NY; Lincoln Park Shopping Center in Dallas; Oswego Commons in the Chicago suburb of Oswego, IL; Johns Creek Village in Duluth, GA, a suburb of Atlanta; and Commons at Royal Palm in Royal Palm Beach, FL. It was 95.5% leased at March 31, placing it above RPAI’s portfolio-wide average of 94.3%.
Earlier on Monday, RPAI reported its first-quarter results. The REIT said operating funds from operations reached $63 million, or $0.27 per share, compared to $52.2 million, or $0.23 per share, for the same period in 2013.
Q1 saw a 4.5% increase year-over-year in total same store NOI. Its 94.3% lease rate across the portfolio was down 10 basis points from Q3 ’13 but up 210 bps Y-O-Y.
Grimes called it “another strong quarter of financial and operational results, highlighted by significant occupancy gains and compelling leasing spreads. Our solid momentum and opportunistic transactional activity, combined with support from the capital markets, has enabled the continued execution of our strategic objectives.”