Washington Prime Group Completes Formation of Second Joint Venture with O’Connor Capital Partners
May 15, 2017 04:10 PM Eastern Daylight Time
COLUMBUS, Ohio–(BUSINESS WIRE)–Washington Prime Group Inc. (NYSE: WPG) today reported the successful completion of the formation of its second joint venture with O’Connor Mall Partners, L.P., an affiliate of O’Connor Capital Partners (“O’Connor”).
As a result of the transaction, O’Connor has a 49% interest in the joint venture and Washington Prime Group retains a 51% interest. The six properties in the joint venture are: Arbor Hills located in Ann Arbor, Michigan; Classen Curve/Nichols Hills Plaza/The Triangle at Classen Curve located in Oklahoma City, Oklahoma; Gateway Center located in Austin, Texas; Palms Crossing located in McAllen, Texas; The Arboretum located in Austin, Texas; and The Shops at Arbor Walk located in Austin, Texas. A seventh property, Malibu Lumber Yard, located in Malibu, California, is expected to be transferred to the joint venture later in the second quarter of 2017.
Washington Prime Group received approximately $340 million of proceeds from the formation of the second joint venture and new mortgage debt, with proceeds being used to reduce the Company’s outstanding debt and for general corporate purposes. In addition, the Company will receive approximately $12.5 million upon transfer of Malibu Lumber Yard. This reflects the gross value of the seven properties of approximately $600 million, less the mortgages secured by such properties at closing. The Company completed the transactions for new mortgage debt of approximately $215 million prior to the completion of the second joint venture. This pricing reflects a capitalization rate of approximately 5.25% on in-place net operating income.
Lou Conforti, CEO and Director of Washington Prime Group stated: “From a strategic and financial standpoint, the completion of the formation of the second joint venture with O’Connor Capital Partners allows us to continue to manage and retain majority ownership of the assets while maintaining a strong balance sheet. Proceeds from this joint venture have resulted in the reduction of leverage which positions WPG as one of the best within the U.S. Regional Mall REIT sector from a leverage standpoint.”
William Q. O’Connor, President and CEO of O’Connor Capital Partners added: “Building on our partnership with Washington Prime Group by concluding this transaction fits well with our investment strategy. These are high-quality, open-air retail properties, all located in robust markets and leased to prime tenants, with a variety of amenities that provide what is essentially a destination shopping experience.”
Washington Prime Group will retain management and leasing responsibilities of the properties. In addition, redevelopment costs associated with the properties will now be a shared expense between the two companies. Washington Prime Group has an existing joint venture with O’Connor for five of the Company’s properties and certain related outparcels.
Founded in 1983, O’Connor Capital Partners is an institutional real estate investment, management, and development firm based in New York City and run by President and CEO, William Q. O’Connor. The firm pursues acquisitions, developments and conversions on behalf of its institutional funds, separate accounts, and own account. O’Connor primarily targets retail and residential opportunities throughout the U.S. and Mexico. Since inception, O’Connor has acquired or developed over $30 billion of property, including over 55 million square feet of retail space and over 30,000 residential units globally.
About Washington Prime Group
Washington Prime Group Inc. is a retail REIT and a recognized leader in the ownership, management, acquisition and development of retail properties. The Company combines a national real estate portfolio with an investment grade balance sheet, leveraging its expertise across the entire shopping center sector to increase cash flow through rigorous management of assets and provide new opportunities to retailers looking for growth throughout the U.S. A trademark application has been filed with the U.S. Patent and Trademark Office for the name “Washington Prime Group” and is currently pending. Learn more at www.washingtonprime.com.