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Fairholme Funds Agrees to Invest in GGP

The Fairholme Fund and The Fairholme Focused Income Fund, each a series of Fairholme Funds Inc., on March 31 entered into definitive agreements to acquire new equity capital of the reorganized General Growth Properties Inc.. The investment manager of each of the funds is Fairholme Capital Management LLC.

The first fund would acquire approximately 268.5 million shares of GGP for approximately $2.7 billion and provide funding of approximately $61.8 million in connection with the $250 million rights offering of General Growth Opportunities, a subsidiary of GGP to be formed and subsequently spun-off to GGP shareholders. The second fund would acquire approximately 2.9 million shares of GGP for approximately $29 million and provide funding of approximately $670,000 in connection with the GGO rights offering.

Each commitment to purchase shares of GGP may be terminated at the option of GGP at any time prior to the hearing on its plan of reorganization and also may be reduced by up to 50 percent at the option of GGP if GGP obtains binding commitments to replace the funds' investments with new equity capital at a net per share price greater than $10.50. In return for their respective commitments, the first fund will receive warrants to purchase approximately 42.4 million shares of GGP and 19.8 million shares of GGO, and the second fund will receive warrants to purchase approximately 450,000 shares of GGP and 210,000 warrants to purchase shares of GGO, in each case subject to customary antidilution adjustments. Neither fund will have any GGP or GGO board appointment rights.

The terms of the transaction are specified in the agreement between each fund and GGP, and such agreement is subject to U.S. Bankruptcy Court approval.

Kimco North Trust III Announces Issuance on Canadian Denominated Notes

Kimco North Trust III, an indirect wholly-owned entity of Kimco Realty Corp., entered into an agreement for the issuance of $150 million Canadian denominated Series 3 unsecured notes to a group of underwriters on a bought-deal private placement basis. The offering is expected to close on or about April 13. The notes bear interest at 5.99 percent and mature on April 13, 2018.

Kimco Realty has provided a full and unconditional guarantee of the notes, which were rated BBB+ (stable) and Baal (negative) by Standard & Poor's and Moody's Investors Services, respectively. This represents the third time Kimco has raised debt capital in the Canadian market. The proceeds will be used by Kimco North Trust III to repay its Series 1 unsecured notes maturing on April 21, 2010, which notes were used to fund long-term investments in Canadian real estate, and for general corporate purposes. RBC Capital Markets, Scotia Capital and CIBC World Markets acted as the underwriters for the private placement offering.

HFF Arranges $90M Refinancing for Four Phases of Southlake Town Square

The Dallas office of Holliday Fenoglio Fowler L.P. (HFF) arranged a $90 million refinancing for four phases of Southlake Town Square, a class-A entertainment and lifestyle center in Southlake, Texas.

The HFF team worked on behalf of the borrower, Inland Western REIT to secure the seven-year, 6.25 percent fixed-rate loan through MetLife Real Estate Investments. The refinancing is replacing maturing CMBS loans and a bank loan.

Southlake Town Square consists of a six phase mixed-use development that was completed within the last 10 years. The refinancing is for four phases, which total 507,500 square feet out of the total 841,029 square feet of the entire Southlake Town Square shopping center. The master development contains more than 150 tenants including Harkin’s Theatre, CitiFinancial, Barnes and Noble, The Container Store, Banana Republic, Gap, Victoria’s Secret, Brooks Brothers and a variety of other national brands and restaurants. Southlake Town Square is situated between Texas Highway 114 and Southlake Boulevard close to the Dallas/Fort Worth International Airport in Southlake.

In a separate deal, the Boston office of HFF closed the sale of a 108,510-square-foot BJ’s Wholesale Club in Franklin, Mass., and arranged the acquisition financing.

HFF’s Coleman Benedict and Ben Sayles exclusively represented the seller, National Development, and procured the 1031 exchange buyer in the $13.7 million, off-market transaction. HFF senior managing director Fred Wittmann subsequently secured a $7.5 million, fixed-rate acquisition loan through Flagship Bank.

CapLease Raises $55M of Additional Capital

CapLease Inc. closed on a common stock and Series A preferred stock offerings. The separate offerings which were made off of the company’s universal shelf registration statement have raised approximately $55 million of additional capital which CapLease intends to use for one or more of the following purposes: reducing recourse debt obligations, including our credit facility which currently stands at $110.5 million outstanding, adding new portfolio investments and other general corporate purposes.

The Series A preferred stock offering raised $40 million of net proceeds to the company. The shares were issued at a price of $23.06 per share, resulting in an annual dividend yield of 9.00 percent inclusive of the 8.125 percent annual dividend rate on the shares. The offering of common stock raised $15 million of net proceeds to the company. The shares of common stock were issued to an affiliate of Golden Gate Capital at a price of $4.77 per share. Inclusive of the offering proceeds and after initially utilizing $13.5 million of cash to lower recourse credit facility borrowings to the current level of $110.5 million, CapLease’s cash on hand now stands at $94.5 million.

Glimcher Secures Financing for the Mall at Johnson City

Glimcher Realty Trust closed on a 10-year, $55 million mortgage loan secured by the Mall at Johnson City, in Johnson City, Tenn. The new loan has a fixed interest rate of 6.76 percent and was originated by Goldman Sachs Commercial Mortgage Capital L.P.

The loan is structured to be sold into the CMBS market. Loan proceeds are being used to retire $37.2 million of secured mortgage debt, previously encumbering the mall, which bore interest at 8.37 percent per annum with the remainder of the loan proceeds to be used to reduce outstanding borrowings on the company’s credit facility.

Equity One Acquires Center in Ridgefield, Conn.

Equity One Inc. acquired the 184,528-square-foot Copps Hill Plaza in Ridgefield, Conn., for approximately $33.4 million.

The surrounding five-mile trade area has a median household income of $177,143. Since its renovation in 2002, the center has been 100 percent leased, including anchor tenants Stop & Shop and Kohl’s. Equity One assumed in-place indebtedness of $19.9 million at a fixed 6.06 percent interest rate through January 1, 2029.

North American Development Group Acquires Auburn, Calif. Center

North American Development Group acquired the 205,100-square-foot Rock Creek Plaza in the Auburn, Calif., for $23.5 million.

This is the firm’s first shopping center acquisition in California. Fouy Ly of Sperry Van Ness represented NADG as well as the seller, a private investment trust, in the transaction.

Rock Creek was extensively remodeled in 2008. The center is 100 percent leased and anchored by K-Mart, Best Buy, Petco, RiteAd and BevMo.

Other Notable Deals

Levin Management Corp. has been named the court-appointed receiver for the 180,000-square-foot ITC Crossing North in Mount Olive Twp., N.J. The center is anchored by Sam’s Club and Staples. The announcement was made by Robert Carson, Levin’s executive vice president and head of the company’s REO practice.

The Denver regional office of Northmarq Capital arranged $9.4 million in permanent financing for the 114,870-square-foot Broomfield Marketplace shopping center in Broomfield, Colo.

RCG Ventures acquired the 180,000-square-foot Louetta Central shopping center in Spring, Texas, for an undisclosed price. The 180,000 square foot shopping center is adjacent to Wal-Mart Supercenter and anchored by Kohl's, Michaels and Ross.

(To have your deals included in our weekly roundup, please email releases to David Bodamer or Elaine Misonzhnik.)

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