Inland, PGGM Partner for $270M Retail JV

OAK BROOK, IL-Inland Real Estate Corp. and Dutch pension fund administrator PGGM have formed a new joint venture to acquire up to $270 million of Midwest retail properties. Inland will be the managing partner and will earn about $1.6 million annually in fees for management, leasing and other services.

Three current Inland properties, worth about $45 million, will be contributed as seed properties  to the portfolio. The retail centers include the 97,638-square-foot Shannon Square Shoppes in Arden, MN; the 82,929-square-foot Mallard Crossing retail center in Elk Grove Village, IL; and the 170,122-square-foot Woodland Commons retail center in Buffalo Grove, IL. PGGM is contributing $20 million of equity to the venture. Mark Zalatoris, president and CEO, tells GlobeSt.com that there is another property now under contract, though he wouldn’t discuss details.

Inland will provide additional assets from the consolidated portfolio, and PGGM will contribute additional equity to the venture as new acquisitions are identified, including about $50 million to contributed properties and $60 million for new purchases. Inland will hold a 55% interest in the venture, and PGGM will hold the 45% interest.

Inland executives said during a REITWeek Chicago presentation recently that retailers have retooled and are able to survive now on lower sales volume. Also, vacated big box stores, such as the sites left by Circuit City, are now becoming a popular place for growth by those surviving retailers.

This venture is will be a key growth vehicle for Inland for the next few years, says Zalatoris. “Chicago and Minneapolis, for example, are diverse economies with resilient marketplaces that are not over-retailed,” he says. “Our goal is to find and invest in centers that hold the dominant grocer in these Midwest markets.”