GlobeSt.com UPDATE: CBL Completes $355M Property Transaction

CHATTANOOGA, TN-CBL & Associates Properties Inc. has officially formed its joint venture with a new US affiliate of Australia-based Galileo America Shopping Trust and closed on its first sale of properties to the entity, Galileo America REIT, which likely will be listed on the Australia Stock Exchange sometime this quarter.

CBL & Associates, which has a 10% interest in the joint venture, is in the process of selling 90% of its ownership interest in 51 power and community centers to Galileo America REIT for total consideration of $516 million. The $355-million first phase of the transaction, which just closed, transferred 90% ownership of 41 centers to the new REIT. The more closings, scheduled for January 2004 and January 2005, will transfer the remaining properties, of which four are under construction or redevelopment.

CBL says the sale of the first 41 properties generated gains (on a GAAP basis) of approximately $72 million that will be recorded in the fourth quarter of 2003. In the transaction, Galileo America REIT assumed approximately $93 million of existing debt on eight of the properties, and CBL retired $24.9 million in debt associated with one of the properties. The 41 properties generated net operating income of $32.5 million in 2002. During the first six months from closing, CBL says it may earn up to $8 million in additional consideration based upon certain leasing goals achieved.