RPT Realty Launches Net Lease Retail Platform
The new venture will target the acquisition of more than $1.2 billion of assets with a focus on essential and high-credit quality tenants.
Retail REIT RPT Realty, whose portfolio consists largely of open-air shopping destinations, is forming a net lease retail real estate platform with GIC Private, Zimmer Partners and Monarch Alternative Capital.
GIC, Zimmer, Monarch and RPT have committed to fund $470 million in the platform over the next three years for acquisitions, including an initial investment of 42 single-tenant assets seeded by RPT. The platform will target the purchase of over $1.2 billion of net lease retail assets.
The 42 net lease retail assets are being carved out of the REIT’s existing open-air shopping centers that are located in top 40 metro areas. They are valued at $151 million and represent 6% of RPT’s fourth quarter 2020 annualized base rent.
RPT will retain a 6.4% stake in the platform, will maintain day-to-day management of the portfolio and will earn management, leasing and construction fees. Additionally, it will invest up to $70 million in preferred equity that will be a component of Zimmer and Monarch’s equity commitment and will not be a direct obligation of the platform.
The company plans to use the proceeds from the initial seeding of assets to accelerate its expansion into higher-growth and lower risk markets and to reduce leverage.
“We believe the current dislocation in the open-air retail sector compared to the triple-net lease sector has created unique investment opportunities based on our extensive analysis,” says CEO Brian Harper in prepared remarks. “The current market disruption has further highlighted the need to service the entire retail distribution chain without regard to the specific form of distribution.”