NORTHBROOK, IL-EPN GP LLC, a real estate investment fund, has finalized its $116 million investment in Macquarie DDR Trust. The capital buys out Macquarie Bank’s interest in the Australian publicly-traded trust, which trades under the ticker symbol “MDT”.
EPN GP’s investment essentially recapitalizes the Trust and allows it to reduce leverage from 73.2% to 64.4%, according to Alex Berman, CEO of EPN GP. Macquarie Bank needed to raise $170 million to $180 million to take care of its maturing debt and decided to raise money through a secondary equity offering.
Berman explains that EPN GP stepped in the offering as a secondary underwriter, which allowed the fund to purchase all the units that were not subscribed by other investors. “We knew we would be getting more than 15%, and we ended up with 48% of the Trust,” he says.
The investment makes EPN GP the largest unitholder in the Trust, which will be renamed EDT Retail Trust. It will trade on the Australian Stock Exchange under the ticker symbol “EDT”.
As the largest unitholder, EPN GP will appoint representatives to the Trust’s board. It also will share management responsibilities of the Trust 50-50 with Developers Diversified Realty Corp., although DDR will handle day-to-day leasing and management duties, Berman says.
The Trust holds interests in 78 operating retail properties valued at $1.5 billion as of December 31, 2009. The portfolio comprises 13.2 million square feet in community shopping centers and single box retail properties located in major markets throughout 23 states.
EPN GP is currently raising a fund totaling $400 million. The Macquarie DDR Trust deal is the fund’s first investment, Berman notes.
The fund is focused on the U.S. retail and commercial real estate sectors. It will invest through direct acquisitions and joint ventures with leading real estate operators and owners of relevant assets or portfolios.
The fund’s two biggest investors are Elbit Plaza USA LP, a subsidiary of Elbit Imaging Ltd. and Plaza Centers N.V and Eastgate Property LLC, a U.S.-based international fund manager with more than $3 billion in assets under management, of which approximately $800 million is dedicated to real estate.
Both Elbit Plaza USA and Eastgate committed $200 million of equity to EPN GP’s fund in February, Berman tells GlobeSt. He expects to raise the remaining capital from non-U.S. institutions.
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