The total value of the properties acquired is $540.8 million, although some will be acquired as part of the joint venture between the two companies and some will be wholly owned by CBL. The joint venture was advised by Chicago-based Commonwealth Realty Advisors Inc. The seller was represented by Gerard Mason, of New York-based Savills Granite.
Under the joint-venture agreement, valued at $356.6 million, CBL and TRS will own the Friendly Center and the Shops at Friendly Center in Greensboro, NC; the Renaissance Center in Durham, NC and a six-building office portfolio in Green Valley Office Park jointly.
CBL will also acquire a 100%-interest in a portfolio of eight community centers located in Greensboro, NC and High Point, NC and 12-office-building portfolio in Greensboro, NC; Raleigh, NC; Newport News, VA and Chesapeake, VA. "This transaction represents a phenomenal opportunity for CBL to add substantial value for our shareholders now and going forward through the numerous leasing, management, and development opportunities the properties offer," says CBL president Stephen Lebovitz in a prepared statement.
The joint venture anticipated closing most of the deal on Friday with the closing of the Renaissance Center expected by the end of the year. The joint venture will assume approximately $81.6 million of non-recourse, long-term fixed debt at a weighted average interest rate of 5.77%, secured by phase one of the Shops at Friendly Center and the Renaissance Center.
CBL will acquire its interest at a weighted average cap rate of 7.1%, based on income in place at acquisition. The company estimates that the transaction will generate approximately $0.03 per share of funds from operations for the first 12 months of operation. The transaction will be financed through a $459.1-million term and bridge loan.
"The acquisition of these centers is consistent with our strategy of owning dominant malls in a trade area," CBL director of investor relations Katie Reinsmidt tells GlobeSt.com.
CBL plans to sell the wholly owned community centers and office buildings, and use the proceeds to pay down outstanding balances on the term and bridge loans. Reinsmidt says there is no timetable for when the properties may be sold. "We don't acquire properties we're not comfortable owning," Reinsmidt says. "But one of the reasons we acquired the properties was that it gave us the flexibility of selling them."
The one-million-sf Friendly Center in Greensboro was originally developed in 1957 and has been expanded several times. The center is currently 94% occupied and is anchored by Belk, Macy's, Sears, a 16-screen Grande Cinema, Barnes & Noble and Old Navy. There is currently a 20,000-sf expansion under way which is expected to be completed in spring 2008.
The Shops at Friendly Center is a 253,000-sf open-air center located adjacent to the Friendly Center. The Shops at Friendly Center is currently 88.9% occupied with construction of a 62,500-sf second phase under way. A grand opening is scheduled for summer 2008. Renaissance Center is a 355,000-sf power center in Durham developed in phases from 2004 through 2007. It is currently 89% occupied with anchors including REI, World Market and Linens n' Things.
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