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ATLANTA-The Southeast’s biggest retail investment deal of the year, expected to close in October, will see Jacksonville, FL-based Regency Centers Inc. and two joint venture partners acquire 2.7 million sf of prime shopping center space in four states from locally based Branch Properties Inc. for $399.3 million or an average $147.88 per sf.

Regency’s partners are Macquarie Countrywide Trust of Sydney, Australia and the Oregon Public Employees Retirement Fund of Salem, OR. The Oregon partner is buying a 70% interest in the 630,000-sf Cameron Village in Raleigh, NC, the largest single property in the JV’s acquiring portfolio.

Macquarie is acquiring a 75% interest in the balance of the portfolio. Regency is contributing $105.7 million. At closing, OPERF and Regency will pay about $118.3 million for Cameron Village, a retail landmark in Raleigh that occupies six city blocks.

In a prepared statement, Regency chairman and CEO Martin E. Stein calls the 25-center acquisition “an excellent strategic fit with our core portfolio, featuring primarily grocery-anchored shopping centers in mature, infill markets with average household incomes of approximately $85,000.”

Stein adds, “The transaction represents a considerable expansion of our joint venture program, which is one of the key tenets of our strategy to enhance our sustainable FFO-per-share growth rate, while generating attractive returns on invested capital.”

After the Cameron Village purchase, Stein says the joint venture will pay about $281 million to acquire the remaining 24 properties at a 7.4% cap rate. “Even though the portfolio is currently 98.7% leased, it is still expected to generate over 2% annual growth in net operating income,” Stein says. Fourteen of the 17 grocery-anchored centers are anchored by Kroger and Publix, two of the leading grocers in the US.

The joint venture “has targeted to sell four of the properties and one of the land parcels after closing, as these assets do not meet the venture’s long-term investment strategy,” Stein says. Three land parcels of undisclosed size were part of the purchase from Branch Properties.

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