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FARMINGTON HILLS, MI-Negotiations between locally based Ramco-Gershenson Properties Trust and Toronto-based RioCan Real Estate Investment Trust came to an abrupt end Jan. 10 with both parties issuing statements that the planned $1.5-billion joint venture was off. RioCan was the first to announce that all negotiations concerning the formation of a JV to buy and develop US shopping centers had been terminated. Announced less than a month ago, the deal was slated to close during the first quarter of 2007.

As recently as Jan. 8, Dennis Gershenson, president and chief executive officer of Ramco, seemed optimistic that the planned JV would close on schedule. GlobeSt.com spoke to Gershenson about the pending agreement while speaking with Gershenson about another partnership--a $450-million joint venture with an investor advised by Heitman LLC to acquire community shopping centers. The later agreement closed at the end of 2006.

Neither Gershenson nor Edward Sonshine, RioCan's president and chief executive officer, were available for comment about the break down in negotiations. Ramco did, however, issue a statement from Gershenson. "Although I am disappointed that we were unable to facilitate a transaction that was viable for both parties, I remain bullish on our prospects for 2007," he says. "The termination of this agreement will not interrupt our aggressive business plan that focuses on the acquisition and development of shopping centers through a number of investment vehicles including our recently announced $450-million joint venture with Heitman LLC."

Under the terms of the unrealized $1.5-billion agreement, RioCan would have owned 70% of the venture with Ramco holding the remaining amount. Ramco, which planned to contribute existing centers valued at about $450 million, would have overseen the acquisition, development, redevelopment, management and leasing of the assets. The agreement also included the purchase of 4.5% of Ramco's stock by RioCan at $36.39 per share as well as an option to purchase additional stock in the future.

The $450-million JV between Ramco and Heitman was formed to acquire up to $450 million of core and core-plus community shopping centers in Midwest and Mid-Atlantic states. In that transaction, the unnamed investor owns 80%, while Ramco holds the remaining equity interest. Ramco, which contributed three of its core shopping centers valued at approximately $125 million to the agreement, is managing both the properties and the JV.

Instant Insights /

Ramco, RioCan Say $1.5B Center JV is Off

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