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Blackstone and Glimcher Close $320M Joint Venture

Glimcher Sells 60% Stake in Two of its Best Malls: WestShore Plaza and Lloyd Center for $192M
March 29, 2010
Glimcher Realty Trust (NYSE: GRT) has closed on its previously announced $320 million joint venture with The Blackstone Group; which involved Blackstone acquiring a 60% interest in Glimcher's Lloyd Center Mall in Portland, OR and Westshore Plaza in Tampa, FL. Glimcher retains a 40% interest and continues to manage the malls. Terms of this transaction and details on the properties follow below. As intended, Glimcher used its $60 million in proceeds to pay down its existing credit facility, bringing that outstanding balance to $232 million.

Original Article Published November 5, 2009:
The Blackstone Group and mall REIT, Glimcher Realty Trust, entered into a joint venture agreement that would be seeded by two of Glimcher's best malls -- Lloyd Center in Portland and WestShore Plaza in Tampa.

Under terms of the joint venture, Blackstone would acquire a 60% stake in the properties, while Glimcher would maintain a 40% stake and continue to lease and manage the center. The gross value for the combined transaction is approximately $320 million, which includes $218 million in mortgage loans in place on the properties. At this value, Blackstone's 60% acquisition price would be approximately $192 million, including the assumption of $130.8 million in debt.

Although not confirmed, the Wall Street Journal cited an anonymous source that broke out the acquisition price by asset. Reportedly, Blackstone would pay $39 million in cash and assume $75 million in debt for its stake in the Lloyd Center mall and would pay $27 million in cash and assume $54 million in debt for its stake in the WestShore Plaza mall. The capitalization rate is estimated at 9.5% for the two malls, which are among only seven malls of the REIT's best malls that it classifies as "Market Dominant."

The transaction is expected to generate net proceeds of approximately $60 million to Glimcher, which the company said it would use to reduce amounts outstanding under its credit facility. The deal is scheduled to close in December 2009.

Further, the pair said they would jointly evaluate additional mall acquisition opportunities in the future. Jonathan D. Gray, senior managing director of Blackstone commented, "We believe there should be regional malls available at attractive pricing during this cycle."

Lloyd Center
Located just off I-84 on Lloyd Center Boulevard near downtown, the super regional mall totals 1.42 million square feet and is anchored by Barnes & Noble, Macy's, Marshalls, Nordstrom, Ross Dress for Less, Sears, two cinemas and an ice rink. The property also includes 180 retail and restaurant tenants, as well as 100,000 square feet of office space.

When Lloyd center opened in 1960 as an open-air center with many buildings connected by walkways, it was recognized as the largest urban shopping center in the country. In 1991, the center was expanded and converted into its current enclosed state. Today, Lloyd Center remains the largest center in Oregon.

In September, Glimcher announced that Merlone Geier Partners had agreed to acquire Lloyd Center for $192 million, including the assumption of the $127.5 million mortgage loan on the property. On Oct. 1, Glimcher announced Merlone terminated the deal. In the company's Oct. 30 third quarter financials call with analysts, Michael Glimcher said that Merlone couldn't "get comfortable with the sector," rather than it being an issue with the asset. Glimcher said the company was in communication with credible quality backup buyers and JV partners.

In September 1998, Glimcher acquired Lloyd Center from SI-Lloyd Associates for $167 million when it was 85% occupied and tenant sales were about $325 per square foot. At the end of 2008, Glimcher reported 94.7% occupancy at Lloyd Center and $379 per square foot in tenant sales, down 9% over 2007 and 12% lower than the average sales per square foot its other "market dominant" malls produce.

WestShore Plaza
Located just off I-275 at the corner of WestShore and Kennedy Boulevards in Tampa, WestShore Plaza is 1,059,112 square feet and is anchored by a 14-screen AMC Theater, JCPenney, Macy's, Saks Fifth Avenue, and Sears. The mall's 115 stores also include retail and restaurant tenants such as Chico’s, White House Black Market, Ann Taylor, bebe, Banana Republic, BCBG, P.F. Chang’s, The Palm Restaurant, Mitchell’s Fish Market and Maggiano’s Little Italy. The mall was built in 1967 and was last renovated in 2001.

Glimcher completed its acquisition of WestShore Plaza in August 2003. The REIT acquired the enclosed mall for $153 million from Grosvenor Group Holdings when it was 86% occupied and producing mall store sales of $360 per square foot. Glimcher financed the deal with a $100 million mortgage, which the company has since paid down to $90.6 million -- the loan matures in September 2012.

At the end of 2008, Glimcher reported mall vacancy of 3.9% and average mall store sales of $422 per square foot. While vacancy had risen 120bps since the end of 2007 and mall store sales had declined $30 per square foot over the same period, WestShore Plaza held its position as the second-highest producing mall in its portfolio.

This article appears in CoStar's Retail News Roundup: Nov. 8 - 14, 2009
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Sports Fan Attic and Bajio Mexican Grill; closings, cutbacks, defaults, or bankruptcy news at Waldenbooks; acquisition, merger, loan, sale, or IPO activity at Crown Acquisitions, Goldman Properties and The Feil Organization, Blackstone and Glimcher, Coventry and DDR, Equity One, Kimco and DRA Advisors, KKR and Dollar General, Iconix and Ecko, and Landry's Restaurants; new retail development news in MD; personnel or corporate announcements at Wal-Mart and ICSC, and Developers Diversified; sustainability and green building news at Food Lion; and more.
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