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Cedar/RioCan JV Buys Seven Centers from PREIT in $200M Deal

Cedar Shopping Centers Inc. and RioCan Real Estate Investment Trust, through an existing joint venture, have entered into a definitive purchase agreement to purchase seven properties for $200 million from PREIT.

The transaction has three parts. The first part includes five anchored shopping centers for $134 million. A sixth property is subject to certain conditions, including terms of an existing partnership between a third party joint-venture partner and PREIT. All six of those properties will be purchased by the existing Cedar (20 percent) and RioCan (80 percent) joint venture.

On the seventh property, Cedar and RioCan will own the property on a 50-50 basis (through separate joint venture arrangements) with the expectation that the parties will eventually redevelop this property. Closing of the purchase of that property is subject to reaching agreement with a third-party joint venture partner of PREIT. Certain "earn-out" arrangements for lease-up of vacant premises during the next two years could potentially result in a further increase of the aggregate purchase price.

Three of the initial five properties to be acquired by the Cedar/RioCan joint venture are located in Pennsylvania, one in New Jersey, and one in Virginia. The remaining two properties potentially to be acquired are also in Pennsylvania. Four of the properties are anchored or shadow-anchored by supermarkets or a "club" store. The aggregate owned-GLA of the initial five properties is approximately 936,000 square feet; for the seven properties the total owned-GLA is approximately 1.8 million square feet.

The initial five properties include the 335,000-square-foot Monroe Marketplace in Selinsgrove, Pa., the 136,000-square-foot Creekview Shopping Center in Warrington, Pa., Pitney Road Plaza in Lancaster, Pa., the 254,000-square-foot Sunrise Plaza in Forked River, N.J. and the 165,000-square-foot New River Valley Center in Christiansburg, Va.

The other two properties are the 263,000-square-foot Red Rose Commons in Lancaster, Pa., and the 558,000-square-foot Whitehall Mall in Allentown, Pa.

The Cedar/RioCan joint venture is expected to place fixed-rate financing at approximately 50 percent to 60 percent loan-to-value on all five initial properties, as well as Red Rose Commons, if acquired.

Whitehall Mall is presently subject to a first mortgage which matures in November 2018. The current remaining balance on the loan is less than $12 million; the interest rate is 7 percent and amortization is on a 20-year schedule. The loan is not assumable by right and is subject to a prepayment penalty.

The five properties being acquired by the existing joint venture feature occupancy of approximately 97 percent; occupancy at Red Rose Commons is approximately 85 percent and occupancy at the Whitehall Mall (including the covered mall area) is approximately 92 percent. The weighted average remaining lease term for all seven properties is 9.2 years and the weighted average base lease rate is $10.06 per square foot.

All closings, other than Whitehall Mall, are expected to occur by the end of 2010.

PREIT will continue to provide certain property management and leasing services for the properties for a three year period under an agreement to be entered into with the joint venture, terminable by the parties after 12 months. Cedar Shopping Centers will retain overall asset and financial management responsibilities.

PREIT will use a portion of the proceeds will be to repay approximately $40 million of mortgage debt secured by three of the properties and to pay approximately $57 million to release two properties securing PREIT’s 2010 credit facility. This transaction is expected to close by the end of 2010.

After the repayment of mortgages secured by these properties and the payment of the applicable release prices under the credit facility, PREIT will use the net proceeds to repay borrowings under its credit facility, in accordance with its terms, and for general corporate purposes.

The sale agreements provide that PREIT will retain certain undeveloped parcels at the wholly-owned properties which Cedar may acquire at a formulated price. PREIT also will earn additional sales consideration for leasing currently vacant space, if such leasing occurs during the two years following the closing of the sale.

Simon Sells $900M of Senior Notes

Simon Property Group Inc. announced that its majority-owned partnership subsidiary, Simon Property Group L.P. has agreed to sell $900 million of its senior unsecured notes in an underwritten public offering through Banc of America Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., as joint book-running managers, and BBVA Securities Inc., Mitsubishi UFJ Securities (USA) Inc., Nikko Bank (Luxembourg) S.A., PNC Capital Markets LLC, SunTrust Robinson Humphrey Inc. and U.S. Bancorp Investments Inc., as co-managers. The offering consists of $900.0 million of 4.375 percent notes due 2021. The notes were priced at 99.605 percent of the principal amount to yield 4.422 percent to maturity.

The operating partnership intends to use the net proceeds from this offering primarily to fund the cash purchase of certain series of its senior notes that are tendered pursuant to the tender offer it commenced on August 9, 2010, and for general business purposes.

DDR Prices $300M of Senior Unsecured Notes

Developers Diversified Realty Corp. priced $300 million of senior unsecured notes in an underwritten public offering.

The offering consists of $300 million aggregate principal amount of 7.875 percent notes due September 2020. The notes are being offered to investors at a price of 99.139 percent with a yield to maturity of 8.0 percent. Interest on the notes will be paid semi-annually on March 1 and September 1.

The net proceeds to the company, after subtracting the underwriting discount and estimated offering expenses, are expected to be approximately $294.1 million, which the company intends to use to reduce balances on its revolving credit facilities and/or collateralized term loan.

J.P. Morgan Securities Inc. and Wells Fargo Securities LLC are serving as joint book-running managers; Citigroup Global Markets Inc., Deutsche Bank Securities Inc., PNC Capital Markets LLC, Scotia Capital (USA) Inc. and U.S. Bancorp Investments Inc. are serving as senior co-managers; and BNY Mellon Capital Markets LLC, Goldman, Sachs & Co., KeyBanc Capital Markets Inc., Mitsubishi UFJ Securities (USA) Inc., Morgan Keegan & Co. Inc., RBC Capital Markets Corp., RBS Securities Inc., Santander Investment Securities Inc. and UBS Investment Bank are serving as co-managers for the offering.

HFF arranges $43.5M Refinancing for Virginia Property

The Washington, D.C. office of Holliday Fenoglio Fowler L.P. (HFF) arranged a $43.5 million refinancing for the 407,364-square-foot Rosslyn Metro Center mixed-use building in Arlington, Va.

Working exclusively on behalf of the Clover Cos., a development and management firm founded in 1979, HFF senior managing directors Bill Asbill and Bob Donhauser and managing director Cary Abod placed the 10-year, fixed-rate loan with Prudential Mortgage Capital Co..

Rosslyn Metro Center has 22 stories of retail and office space that is 89 percent leased, including about 176,000 square feet leased to the GSA.

Hutensky Capital Buys City Place Mall in $22.8M Deal

Hutensky Capital Partners (HCP) acquired the 350,000-square-foot City Place Mall in Silver Spring, Md., from an affiliate of Petrie Ross Ventures for $22.8 million in a three-party deal that included a discounted payoff of 100 percent of the property’s outstanding debt. An affiliate of the seller will manage and lease the property and lead the redevelopment process

“We were attracted by the property’s location in the central business district of Silver Spring, a vibrant urban area with proven retail performance,” HCP General Partner Brad Hutensky said in a statement. “However, like many properties today, the asset was overleveraged. By providing a big chunk of fresh capital, we were able to find a middle ground for settlement that the lender and borrower could agree to.”

Ramco-Gershenson Acquires Chicago Property

Ramco-Gershenson Properties Trust acquired the 107,369-square-foot Liberty Square shopping center in Wauconda, Ill., for $15.2 million in an all cash transaction.

Liberty Square is anchored by a 54,522 square foot Jewel-Osco supermarket and is 89 percent occupied.

Oxylane Groupe Buys California Center in $11.8M Deal

Oxylane Groupe-Decathlon bought the 128,330-square-foot Town Center Ontario in Ontario, Calif., for approximately $11.8 million from LNR in an all-cash deal.

Faris Lee Investments President Richard Walter and Senior Managing Director Donald MacLellan represented LNR in the transaction. Oxylane Groupe-Decathlon was represented by Epsteen & Associates/Samuels Co. The property, which was built in 2002, is 85 percent vacant.

Oxylane Groupe-Decathlon, a manufacturer of sports apparel and equipment, will open one of its first U.S. locations at the property. Town Center Ontario’s existing tenants include Hooters, Denny’s, LA Carpet, Golden Chopstix and Arizona Leather Company.

Other Notable Deals

TNP Strategic Retail Trust Inc. acquired the 56,743-square-foot San Jacinto Esplanade in San Jacinto, Calif., for an undisclosed price. The property is approximately 52 percent leased. Tenants have staggered lease expirations that range from 2012 to 2027.

Rick Vita of Jones Lang LaSalle has been appointed as receiver of the 1,635,000-square-foot Valley View Center mall in Dallas. Vita is responsible for controlling and directing the asset until a resolution between the lender and borrowers is achieved. Effective immediately, Jones Lang LaSalle will be responsible for managing the mall and advising on the best course of action for the mall going forward.

Andrew Stewart, Dev Morris, and Lisa McMahon of Cronheim Mortgage arranged permanent financing of $3.6 million for a free-standing, 14,490-square-foot Walgreen's in Kissimmee, Fla. The loan has a 10-year term amortized over 25 years and was placed with one of Cronheim's life insurance company correspondents, for which Cronheim will act as servicing agent. The tenant is operating under a 75-year absolute net lease, although the tenant is able to terminate at any time after the 25th year upon giving 12 months notice.

RealtyLink LLC sold a 4,500-square-foot Verizon retail building located 8 miles northeast of downtown Greenville, S.C., for $2.5 million. The buyer was a local high net worth investor who paid all cash.

Gary Rifkin, vice president of NorthMarq Capital’s Omaha, Neb., regional office, arranged first mortgage financing of $2.15 million for a 14,904-square-foot Walgreen’s in Omaha. Financing was based on a 10-year fixed-rate term with a 20-year amortization schedule and was arranged for the borrower,BDRE – L Street LLC, by NorthMarq through its relationship American National Bank.

Velmeir Companies, a full service commercial real estate development company has expanded their responsibilities into the Washington D.C. market as CVS Pharmacies’ preferred developer. The company will now be servicing the District of Columbia, Northern Virginia, and Maryland markets.

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