$158M Buys 50% of Opry Mills

NASHVILLE, TN-The Mills Corp., a retail REIT based in Arlington, VA, has agreed to sell a 50% interest in its Opry Mills property here to an open-end fund of Germany-based Kan Am Grund Kapitalanlagegesellschaft mbH. The set sale price for the Opry Mills interest is $158.1 million, including $89.3 million of allocable joint venture debt.

Kan Am Grund is an affiliate of Germany-based Kan Am Group. One of its two open-end funds also recently acquired a 50% stake in Mills’ Great Mall of the Bay Area. Kan Am’s closed end funds are a joint venture partner with Mills at 10 operating properties and two development projects.

Under the terms of the Opry Mills partnership arrangement, both parties will receive an un-guaranteed 9% preference on equity. Mills’ equity interest and cash flows in Opry Mills will be increased disproportionately after payment of the 9% preference. This structure is expected to provide Mills with a higher first-year return on its equity versus a sale of a straight-up 50% partnership interest in a structure priced to provide an un-leveraged first-year yield of 7.48%.