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ROIC Refinances $175M Unsecured Credit Facility, $110M Unsecured Term Loan

Retail Opportunity Investments Corp. (ROIC) refinanced a $175 million senior unsecured revolving credit facility and a $110 million senior unsecured term loan facility. The loans were arranged by KeyBank Capital Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc.

The unsecured revolving credit facility has an initial maturity date of Sept. 20, 2014, with a one-year extension option. The term loan facility has a maturity date of Sept. 20, 2015. Both facilities have the same LIBOR-based borrowing margin, initially priced off a grid that is tied to ROIC’ leverage ratio. Based on the company’s current leverage ratio, the facilities will feature an interest rate of LIBOR plus 175 basis points. If ROIC receives an investment grade credit rating from at least two rating agencies, the borrowing margin will convert to a ratings-based grid. In addition, both facilities contain an accordion feature, giving the company the ability to increase the revolving credit facility to $300 million and the term loan to $175 million, subject to commitments and other conditions.

“The refinancing of our revolving credit facility and the closing of the term loan on an unsecured basis at spreads 75 basis points inside our existing facility reflects our continued success in executing the company’s business plan and our commitment to a conservative and flexible capital structure,” said ROIC CFO John B. Roche in a statement. “As of June 30, 2011, debt to total assets was 13.3 percent and approximately 88 percent of the company’s portfolio was unencumbered. In addition to tighter spreads, the new facilities include a covenant package consistent with our investment grade peers and reflect our lenders’ confidence in the company.”

The revolving credit facility will be used to grow ROIC’ portfolio, while proceeds from the term loan facility will be used to pay off outstanding debt under the existing credit facility.

KeyBank National Association served as the administrative agent and L/C issuer on the transaction. Bank of America National Association is the syndication agent, with PNC Bank, National Association and U.S. Bank National Association acting as the co-documentation agents. Other participants include Bank of Montreal, Compass Bank, JPMorgan Chase Bank N.A, Royal Bank of Canada and Wells Fargo Bank, National Association.

Realty Income Prices Stock Offering, Expects to Net $20M

Realty Income Corp. announced that its public offering of 6,300,000 shares of common stock has been priced at $34.00 per share. The offering is scheduled to close on Sept. 26. Net proceeds from the transaction, after underwriting discounts and estimated offering expenses are taken out, will be approximately $203.6 million. In addition, the company granted underwriters a 30-day option to purchase up to 945,000 additional shares of stock to cover overallotments, if any.

Realty Income plans to use the proceeds to repay borrowings under its $425 million acquisition credit facility.

The underwriters for the offering include: BofA Merrill Lynch, Morgan Stanley and Wells Fargo Securities (joint book-running managers), Credit Suisse, RBC Capital Markets, Raymond James and UBS Investment Bank (co-lead managers), Baird, BB&T Capital Markets, Citigroup, J.P. Morgan, Janney Montgomery Scott, Jefferies, Morgan Keegan and Stifel Nicolaus Weisel (senior co-managers), and BNY Mellon Capital Markets LLC and Piper Jaffray (co-managers).

Saul Centers Buys Three Assets in Washington, D.C., Baltimore Metro for $168M

Saul Centers Inc. acquired three Giant Food-anchored shopping centers in the metropolitan Washington, D.C./Baltimore area for the aggregate price of $168.5 million. The centers total 635,000 square feet of space.

Kentlands Square is a 241,000-square-foot neighborhood shopping center in Gaithersburg, Md. It was completed in 1993 and is 100-percent leased, with anchors including a 61,000-square-foot Giant Food and a 104,000-square-foot Kmart. It was purchased for $74.5 million.

Severna Park is a 254,000-square-foot neighborhood shopping center in Severna Park, Md. It was completed in 1974 and renovated in 2000. The center is a 100 percent leased, with anchors including a 63,000-square-foot Giant Food and a 92,000-square-foot Kohl’s. It was purchased for $61 million.

Cranberry Square is a 140,000-square-foot neighborhood shopping center in Westminster, Md. It was completed in 1991 and is 91 percent leased. Anchors include a 56,000-square-foot Giant Food and a 24,000-square-foot Staples. The property was sold for $33 million.

Saul Centers financed the acquisitions with $60 million from two secured bridge loans, a $38 million non-recourse loan on Severna Park, approximately $17.1 million in cash and borrowings under the company’s line of credit and $55.8 million of new equity through the issuance of 1,684,782 restricted shares of common stock and operating partnership units.

The secured bridge loans came with an initial term of six months and accruing interest, payable monthly, at a rate equal to LIBOR plus 175 basis points. The loan secured by Severna Park features a 15-year term and requires monthly principal and interest payments based on a 4.3 percent interest rate and a 25-year amortization schedule.

In addition, Saul Centers entered into interest-rate lock agreements for two non-recourse permanent loans totaling $63 million the proceeds from which will pay off the bridge financing. The loans have 15-year terms and require aggregate monthly payments based on a weighted average interest rate of 4.58 percent and a 25-year amortization schedule.

GGP, Canada Pension Plan Investment Board Buy St. Louis Mall

A joint venture of General Growth Properties Inc. and Canada Pension Plan Investment Board purchased Plaza Frontenac, a 482,000-square-foot class-A mall in St. Louis, Mo. from Davis Street Properties. Completed in 1974, the two-level mall underwent a full renovation in 1994. It is currently 96 percent leased to retailers including Tiffany, Coach, Louis Vuitton and Kate Spade, among others. Neiman Marcus and Saks Fifth Avenue anchor the property. The mall also offers future expansion potential on its south side.

Dave Doupe, Kris Cooper and Margaret Caldwell, of Jones Lang LaSalle, represented the seller in the transaction.

“This luxury high-end property received an intense amount of interest from a wide variety of investors as it boasts in-line shopping sales of approximately $500 per square foot,” said Doupe in a statement. “This strategic purchase will allow GGP and CPPIB to expand their footprint in St. Louis and further solidify their standing as two of the premiere mall owners and operators in the world.”

American Realty New York Recovery REIT in Contract to Buy New Retail Assets

The sponsor of American Realty Capital New York Recovery REIT Inc. entered into contracts through which the company will acquire New York City-based retail properties for an aggregate $36.5 million.

The properties will include four fee simple retail condominiums at 122 Greenwich Ave. in Manhattan totaling approximately 7,080 square feet. Two of the condominiums are leased to TD Bank, one is leased to Starbucks and one is vacant. Overall, the space is 78 percent occupied. The acquisition is scheduled to close in November.

American Realty Capital will also buy a freestanding fee simple Duane Ready pharmacy at 163-30 Cross Bay Blvd. in Queens, N.Y. The property was built in 2008 and contains approximately 9,767 square feet of space. It is 100 percent leased. The acquisition is scheduled to close in late September.

Marcus & Millichap Negotiates Sale, Financing Transactions

Marcus & Millichap Real Estate Investment Services helped negotiate the following transactions:

  • Woodland Paradise Group sold Chapel Hills East, a 178,252-square-foot grocery-anchored power center in Colorado Springs, Colo., to an institutional investor for $25 million. Chapel Hills East was completed in 1995. At the time of the sale it was 100 percent occupied, with tenants including Whole Foods Market, Best Buy, DSW Shoe Warehouse, The Pep Boys, Old Navy, Office Max and Carter’s. Garrette Matlock, senior vice president in Marcus & Millichap’s Denver, Colo. office, represented the seller in the transaction.
  • Marcus & Millichap negotiated the sale of Stonebridge Village, an 85,499-square-foot shopping center in Cary, N.C. for approximately $14.3 million. The price works out to $168 per square foot. Stonebridge Village was built in 2007. Tenants at the center include Harris Teeter, Allen Tate Realtors, Allstate, Chef’s Palette, Dunkin’ Donuts, Fantastic Sams, Triangle Optometry and Urgent Care of Cary. Daniel A. Molloy, of Marcus & Millichap’s Atlanta, Ga., office, represented the seller, 1st Carolina Properties, in the transaction.
  • Marcus & Millichap Capital Corp. arranged a $4.8 million acquisition and construction loan for a retail neighborhood center in Orlando, Fla. The loan features a fixed interest rate for the first 10 years of a 20-year term and a 20-year amortization schedule. The transaction came with an LTV of 85 percent. Michael Balan, director in the company’s Miami office, negotiated this transaction.
  • HFF Negotiates $13.4M Phillips Edison Sale

    Phillips Edison & Co. sold Riverchase Village, a 178,510-square-foot retail center in Hoover, Ala. to Midsouth Capital Fund I LLC for $13.42 million, free and clear of debt. The property is 97 percent leased, to tenants including Best Buy, PetSmart and Bruno’s Supercenter. Jim Hamilton, Richard Reid and Brad Peterson, of HFF, represented the seller in the transaction.

    J&D Restaurant Group Becomes New Jack in the Box Franchisee with 37 Texas Locations

    J&D Restaurant Group Inc., a new franchisee, acquired 37 Jack in the Box corporate locations in Texas. The portfolio includes locations in Waco and Tyler. The deal was funded in part with a $13.2 million loan from GE Capital Franchise Finance. J&D Restaurant Group already operates restaurants under the Church’s Chicken, Arby’s and Dickey’s Barbecue brands.

    Other Notable Deals

    TNP Strategic Retail Trust Inc. acquired Topaz Marketplace, a 50,359-square-foot grocery-anchored shopping center in Hesperia, Calif. The center was completed in 2008 and is located on three separate parcels. It is currently 100 percent leased to tenants including Fresh & Easy Neighborhood Market, MetroPCS, Da Vita Dialysis, Wood Grill Buffet and the Pizza Factory. Tenants at the center have staggered lease expirations that range from 2018 to 2018. The center comes with a 2,900-square-foot developable land parcel.

    Henry S. Miller Cos. sold Lakeside Village, a 50,254-square-foot shopping center in Dallas, Texas to Retail Plazas Inc. Property Company of America developed the center in 1986. Henry S. Miller purchased Lakeside Village from a subsequent owner in 1999 through a partnership organized by Miller Investment Partners Inc. Vaughn Miller, president of the retail division with Henry S. Miller, and Robert Grunnah, president of the investment division, handled this transaction.

    Millennium Properties R/E Inc. negotiated the sale of 592-598 N. Pinecrest Road, a 29,000-square-foot neighborhood center in Bolingbrooke, Ill. for $3.9 million in a court-ordered transaction. The price equates to $134 per square foot. The property is currently 88 percent occupied. The sale was undertaken as part of a dissolution of an LLC partnership. Daniel J. Hyman, president of Millennium Properties, negotiated the transaction as a court-appointed officer. Rita Alliss Powers, of Greenberg Traurig LLP, counseled him in the deal.

    Faris Lee Investments negotiated the sale of The Shops at Pacific Park, a 15,195-square-foot strip center in Aliso Viejo, Calif. to Feldspar LLC for $3.7 million. The center was purchased through a receivership in an all cash transaction. It was completed in 1999 and features an occupancy rate of 88 percent. Dennis Vaccaro and Rich Walter, of Faris Lee, represented the receiver, Key Bank, in the transaction. Dennis Vaccaro and Matt Mousavi represented the buyer.

    NorthMarq Capital arranged a $2.6 million, fixed-rate first mortgage for Brenham Crossroads, a 16,066-square-foot retail center in Brenham, Texas. The loan featured a 10-year term with a five-year extension, and a 15-year amortization schedule. Tony Gray, vice president in NorthMarq’s Houston, Texas office, negotiated this transaction.

    JR Enterprises LLC sold Waverly Shopping Center, a 20,521-square-foot retail center in Pompano Beach, Fla., to Waverly Pompano Center LLC for $1.6 million. The center was completed in 1985 and renovated in 2006. At the time of closing it was 70 percent occupied, with tenants including AutoZone and Subway. David Donnellan and Todd Weintraub, of CB Richard Ellis, represented the seller in the transaction. Gene Snyder Co. represented the buyer.

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