Glimcher, O'Connor Forge $1.6B JV

COLUMBUS, OH—WP Glimcher, the shopping center REIT formed from the merger of Glimcher Realty Trust and Washington Prime Group, has entered into a $1.625-billion joint venture with an affiliate of O'Connor Capital Partners. O'Connor Mall Partners and WP Glimcher will share ownership of five geographically diverse shopping centers that total approximately 3.3 million square feet, not including tenant-owned space.

O'Connor will pay 49% of the properties' aggregate value less mortgage debt for its 49% interest in the JV, while WP Glimcher will retain a 51% interest and continue to lease and manage the properties. The partnership covers the Mall at Johnson City in Johnson City, TN; Pearlridge Center in Aiea, HI; Polaris Fashion Place in Columbus, OH; Scottsdale Quarter in Scottsdale, AZ; and Town Center Plaza in Leawood, KS.

WP Glimcher expects to realize net proceeds of about $430 million from the JV, on which the pricing implies a cap rate of about 5.25% on in-place NOI. Proceeds from the JV, which is expected to close in the second quarter, will be used to repay part of the bridge loan the company used to acquire Glimcher Realty Trust. Eastdil Secured and Wachtell, Lipton, Rosen & Katz advised WP Glimcher, while Neal, Gerber & Eisenberg LLP is serving as legal advisor to O'Connor.

Separately, the REIT announced its fourth-quarter and full-year results Thursday. Q4 funds from operations came in at $85.9 million, or $0.46 per diluted share, compared to $97 million, or $0.52 per diluted share, in the prior year period. The company attributed the difference to costs related to the merger between Washington Prime and Glimcher, which was finalized last month.

Expenses related to the merger also affected FY FFO: $295.1 million, or $1.57 per diluted share, compared to $359.1 million, or $1.92 per diluted share, for the year prior. Nonetheless, chairman Mark Ordan and CEO Michael Glimcher say in a joint statement, “"WP Glimcher is well positioned to deliver shareholder value by generating cash flow from our combined portfolio of enclosed malls, open-air lifestyle centers and community centers. We have quickly taken major steps to enhance our balance sheet, integrate our management team and identify a pipeline for growth in each format in the portfolio.”