NEW YORK CITY—American Realty CapitalProperties said Wednesday it plans to sell substantiallyall of its multi-tenant shopping center portfolioto a Blackstone Group fund for $1.98 billion incash. Proceeds from the sale would then be recycled to fund the netlease REIT's $1.5-billion Red Lobster portfolio acquisition, which itannounced this past Friday.


The pending sale to Blackstone Real Estate Partners VII followsup ARCP's announcement in March that it planned to spin off themulti-tenant retail into a separate REIT, to be known as American RealtyCapital Centers Inc. Instead, most of the 11.7-million-square-footportfolio that would have comprised ARCC's holdings will trade toBlackstone, although ARCP would continue to own 18 shopping centerstotaling 1.7 million square feet. The portfolio came into ARCP'sfold as a result of its $11-billion merger with Cole Real EstateInvestments earlier this year.


“We continued to look at options to create stockholder valuethrough a disposition of our multi-tenant assets, and we believethat through the sale to Blackstone of the multi-tenant shoppingcenter portfolio, we have accomplished this,” says David S.Kay, ARCP's president. “This sale will allow us to acquirewhat in our view are the 500 best Red Lobster stores profitably byselling our multi-tenant portfolio at a cap rate that is more than100 basis points lower than the 7.9% cash cap rate for the RedLobster portfolio.”


In an SEC filing, ARCP says the portfolio that it intends tosell to Blackstone runs to 78 properties, including 35 powercenters, 12 grocery centers, 21 anchored centers and 10single-tenant properties. The single-tenant properties are beingincluded in the multi-tenant portfolio in order to minimize releaseprices, make-whole payments and defeasance amounts that would bepayable if these 10 single-tenant retail properties were notincluded in the portfolio, according to the SEC filing.


ARCP also said Wednesday that in view of the Red Lobster dealmeeting its full-year acquisitions target of $3 billion, it wouldraise the bar to $4.5 billion in acquisitions for calendar 2014.Separately, the REIT said Wednesday that it had commenced a publicoffering of 100 million shares of common stock, with theunderwriters having a 30-day option to purchase up to 15 millionadditional shares.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.