CREJ - Journal

44 / 100

Page 8AA — COLORADO REAL ESTATE JOURNAL — January 7-January 20, 2015
trust that is owned byAmerican
Realty, paid $116.5 million to
Alberta.
American Realty purchased
Cole in a $6.85 billion deal in
2013, as part of Schorsch’s strat-
egy to create one of the big-
gest real estate empires in the
country.
Cleveland-based DDR Corp.
and an affiliate of Blackstone
Real Estate Partners VII, last
fall bought Cornerstar with 70
other shopping centers from
American Realty in a $1.93 bil-
lion transaction.
As part of the transaction, the
joint venture allocated $124 mil-
lion to Cornerstar.
“My understanding is this
happened before all of the
problems with American Realty
Capital surfaced,” said Brad
Lyons, who was part of the
Denver CBRE team that rep-
resented Alberta when it sold
Cornerstar to Cole.
“From what I understand,
this predated all of the issues,
so the portfolio sale wasn’t used
as a way to raise cash to address
any of American Realty’s cur-
rent problems,” Lyons said.
In fact, he said it appears
to have been a good deal for
American Realty, whose stock
has been hammered since the
company’s accounting prob-
lems started making national
headlines.
It also appears to be a good
deal for the buyers, he said.
“I think it was a good deal for
DDR to acquire high-quality,
geographically diverse centers
across the country,” Lyons said.
“Frankly, there is not a lot
of product like this available,”
he continued. “The price they
paid seems indicative of what
you pay for the best-in-class
centers.”
Blackstone, as part of the
joint venture with DDR, owns
95 percent of the equity. DDR
owns the remaining 5 percent
and will manage and lease Cor-
nerstar and the other 70 shop-
ping centers.
The purchase includes an $800
million loan from Wells Fargo
and Citigroup Global Markets
Realty group, according to pub-
lic records, said John Winslow,
principal of locally based Win-
slow Property Consultants.
That nonrecourse loan facil-
ity has a five-year term and an
interest rate of LIBOR plus 160
basis points, according to DDR.
Across the entire 71-center
portfolio, the average house-
hold income is about $75,000,
according to DDR.
The average base rent, how-
ever, is about 6 percent below
DDR’s current prime average
rent, “representing a unique
opportunity to drive growth,”
according to the company.
DDR invested about $20 mil-
lion in common equity and $300
million in preferred equity with
a fixed dividend rate of 8.5 per-
cent into the venture.
DDR also assumed its pro rata
share of joint venture debt of
$62 million.
The joint venture has assumed
approximately $437 million of
senior nonrecourse debt, which
has a weighted average term of
7.1 years and an interest rate of
4.45 percent.
"We are pleased to once again
announce the closing of a trans-
action with our partners at
Blackstone, further highlighting
our ability to source high-qual-
ity acquisitions in an oppor-
tunistic manner,” said David
J. Oakes, president and chief
financial officer of DDR, when
it closed on the purchase of the
portfolio.
“In consultationwith our part-
ner, we are in discussions with
various counterparties to sell
a portion of the portfolio over
the near term with the goals
of improving the risk-adjusted
returns and maximizing portfo-
lio quality for the joint venture,”
Oakes added.
Other News
n A California-based com-
pany with a huge appetite for
retail and industrial proper-
ties in the Denver area recently
made its first major purchase in
Denver.
The company, through a
limited liability company
called Mexico and Bellaire,
paid $11.35 million for the
23,057-square-foot building
anchored by a Petco at 4100 E.
Mexico Ave.
Ryan Higgins of AIC Com-
mercial Real Estate LLC rep-
resented the buyer. Mark Ern-
ster with SullivanHayes repre-
sented the seller, Mission Bay
Investors LLC.
The privately held buyer
doesn’t want to be identified by
name at this time, Higgins said.
They really liked the location
of the Petco property, Higgins
said.
“They liked the tenant. They
liked that is a creditworthy,
national retailer. They liked that
it has a long-term lease.”
The buyer also like its loca-
tion.
“They really like that is has
I-25 frontage and is very vis-
ible,” he said.
Previously, it had bought an
empty building in Denver, but
this was its first major purchase
in the city, he said.