OAK BROOK, IL-A new venture involving two Inland non-traded REITs, based here, and Coconut Creek, FL's Minto Builders (Florida) Inc. will be seeded with a $442-million portfolio of mostly Houston assets, including numerous single-tenant and/or ground-leased properties. It may well be just the beginning, though Minto Builders, which plans to be taxed as a REIT, "anticipates acquiring up to $2.7 billion in real estate assets," according to a Securities and Exchange Commission filing for Inland American Real Estate Trust Inc.

That Inland entity has formed a joint venture with Minto Delaware Inc., which currently owns all equity of the to-be-formed Minto REIT. Inland American has agreed to buy a total of $1.172 billion of MB REIT stock in several stages through the end of 2006; all told, the share purchases will give Inland American an 80% stake in the Minto REIT. Inland Western Retail Real Estate Trust Inc., meanwhile, entered into a subscription agreement to purchase up to $1.173 billion of preferred shares in the Minto REIT, and, should Inland American not satisfy its stock purchase obligations, Inland Western "may be required to purchase series C preferred shares from the MB REIT in an amount equal to approximately $300 million," according to its SEC filing.

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The seeds of that potential $2.7-billion Minto REIT is the $442-million, more than 1.8 million-sf portfolio that Inland Real Estate Acquisitions Inc. is buying from Houston-based NewQuest Properties and to which the MB REIT has been assigned the right to acquire. Four properties have closed thus far and the 36 total properties include the following single-user assets: a 45,906-sf 24 Hour Fitness Center building in Woodlands, TX built in 2002 and leased to June 2017; a 19,200-sf Wild West Club building in Houston built in 1998 and leased to February 2008; a 2,719-sf office building in Jacinto City, TX built in 2000 and leased to Magnum Staffing until October of this year; a ground-leased Chili's in Jacinto City that expires in September 2008; three Cinemark movie theaters ranging from 39,081 sf to 68,000 sf, located in Jacinto City, Pearland and Webster, TX and with leases that expire in 2018, 2025 and 2021, respectively; a ground lease property occupied by Joe's Crab Shack in Jacinto City to July 2018; a ground lease property occupied by NTB Eldridge till August 2018 in Houston and a 14,560-sf Walgreens in Springfield, MO built in 2003 and leased till January 2073. In addition, numerous shopping centers in the portfolio include ground leases with such occupants as: HEB, Jack in the Box, McDonald's, Taco Cabana, Walgreens, Wells Fargo, Wendy's and Whataburger.

"The sale of these properties is strategic for us. It will position NewQuest to move ahead with growth strategies on several fronts," NewQuest managing partner Steven D. Alvis said in an announcement. "The relationships we have cultivated with our retailers have created many new opportunities for us and we want to continue to partner with them…The sale of some of our assets provides this opportunity."

"This transaction furthers the rapid expansion of Inland-sponsored REITs in Texas," said Matt Tice, who represented Inland in the portfolio purchase negotiations. He also noted that Inland has contracted to buy more than 5.8 million sf in the state.

The MB REIT also has made or anticipates making other recent acquisitions approved by its board of directors, three of five members of which come from Inland management. These include the proposed acquisition of a 110,007-sf Suffolk, VA office building leased to the General Services Administration for the US Joint Force Command into 2014, and a 161,600-sf distribution building in Conroe, TX built this year and occupied by McKesson Corp. until June 2016.