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Deal of the Week 11/19

Weingarten Realty Investors and Hines Real Estate Investment Trust, Inc. formed a joint venture in which a subsidiary of Hines REIT will acquire a 70 percent interest in a 1.5-million-square-foot, 12-property portfolio of Weingarten shopping centers for $271 million. The transaction will feature a cap rate of approximately 7 percent. Weingarten will receive property management, joint venture management and leasing fees for the centers, as well as incentive distributions above certain return hurdles.

“We announced a program in 2006 to do more joint venture transactions and this deal is consistent with that and brings [the initiative] to almost $2 billion of joint ventures since 2006,” says Gary Greenberg, senior vice president of capital markets with Weingarten. This will be Weingarten’s first transaction with Hines REIT, but “we hope to grow the relationship further through multiple transactions,” adds Greenberg.

Eight of the centers were purchased on Nov. 13 for approximately $205 million. The remainder of the portfolio will be closed upon finalization of loan assumptions.

Weingarten Realty provided $134 million in preferred equity for the initial closing. The proceeds from the $100 million loan will be used to reduce the company’s equity position upon closing.

The Dallas office of HFF represented WRI’s interest in structuring the venture.

Other Notable Deals

Feldman Mall Properties, Inc. entered into an agreement with Inland American Real Estate Trust, Inc. for the repurchase of 2,000,000 shares of Feldman’s 6.58 percent Series A Cumulative Convertible Preferred Stock. As payment, Inland will receive title to the 1.3-million-square-foot Stratford Square Mall, in Bloomingdale, Ill., the 1.1-million-square-foot Northgate Mall, in Cincinnati, and the 764,719-square-foot Gold Triangle Mall in Denton, Texas, subject to mortgage indebtedness secured by the properties. Inland will also pay Feldman approximately $9.1 million in cash, representing the amount by which the value of the malls exceeds the value of the stock. The transaction is subject to the approvals of the boards of directors of both companies…Phillips Edison & Co. completed a $35 million revolving credit facility for its grocery-anchored neighborhood and community shopping center fund. The facility, arranged through JPMorgan Chase Bank, N.Y., has a term of two years and can be extended one year and increased to $100 million… Marcus & Millichap Real Estate Investment Services negotiated the sale of 10 Taco Bell restaurants located throughout Alabama, Tennessee and Virginia for $12.2 million.

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