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FARMINGTON HILLS, MI-Ramco-Gershenson Properties Trust and Clarion Lion Properties Fund are forming a joint venture to invest in $450 million worth of community shopping centers in the Southeast and Midwest US. Ramco-Gershenson says the late 2004 purchases of nine shopping centers, in Florida and Michigan, for a total price of $266.3 million would be the first properties acquired by the new venture.
Ramco-Gershsenson owns 74 shopping centers with about 15 million sf of leasable space. Clarion Lion is the domestic real estate investment management affiliate of the New York-based ING Group, one of the world's largest financial services companies. ING has more than $57 billion of real estate assets.
"This joint venture affords us the opportunity to co-invest with a major shopping center operator in their core markets," says Stephen Hansen, managing director and portfolio manager for the Lion Properties Fund. "We benefit from having a specified portfolio of properties and the ability to add new investments to the venture."
Ramco-Gershenson will manage the properties and will receive fees for acquisitions, financing, property management, leasing, construction management and disposition of the assets as well as have the opportunity to receive performance-based incentives. Ramco-Gershenson and Clarion Lion have committed to contribute equity capital of $54 million and $126 million, respectively to the joint venture the two firms. Dennis Gershenson, president and chief executive officer of Ramco-Gershenson, says three of the nine centers purchased as part of the $266.3 million in deals have already been closed, representing a total purchase price of $48 million. The remaining six centers are to close by the end of the first quarter of 2005. The joint venture has 24 months to invest the balance the $450-million program capital, the companies say.
"We are pleased to be able to initially establish the venture with new acquisitions representing approximately 60% of its total size in lieu of contributing a number of assets from our existing portfolio to seed the relationship," Gershenson says. "In addition to the immediate accretive benefit of the transaction, Ramco's history of being able to add value to core assets will further benefit both venture partners."
Deutsche Bank Securities Inc. acted as a financial advisor to Ramco-Gershenson in creating the joint venture. Shares of Ramco-Gershenson closed at $31.68 Tuesday on the New York Stock Exchange, down $0.51.
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