Washington Prime Group Completes Formation of Second Joint Venture with O’Connor Capital Partners
May 15 2017 - 4:10PM
Business Wire
Washington Prime Group Inc. (NYSE: WPG) today reported
the successful completion of the formation of its second joint
venture with O’Connor Mall Partners, L.P., an affiliate of O’Connor
Capital Partners (“O’Connor”).
As a result of the transaction, O’Connor has a 49% interest in
the joint venture and Washington Prime Group retains a 51%
interest. The six properties in the joint venture are: Arbor Hills
located in Ann Arbor, Michigan; Classen Curve/Nichols Hills
Plaza/The Triangle at Classen Curve located in Oklahoma City,
Oklahoma; Gateway Center located in Austin, Texas; Palms Crossing
located in McAllen, Texas; The Arboretum located in Austin, Texas;
and The Shops at Arbor Walk located in Austin, Texas. A seventh
property, Malibu Lumber Yard, located in Malibu, California, is
expected to be transferred to the joint venture later in the second
quarter of 2017.
Washington Prime Group received approximately $340 million of
proceeds from the formation of the second joint venture and new
mortgage debt, with proceeds being used to reduce the Company’s
outstanding debt and for general corporate purposes. In addition,
the Company will receive approximately $12.5 million upon transfer
of Malibu Lumber Yard. This reflects the gross value of the seven
properties of approximately $600 million, less the mortgages
secured by such properties at closing. The Company completed the
transactions for new mortgage debt of approximately $215 million
prior to the completion of the second joint venture. This pricing
reflects a capitalization rate of approximately 5.25% on in-place
net operating income.
Lou Conforti, CEO and Director of Washington Prime Group stated:
“From a strategic and financial standpoint, the completion of the
formation of the second joint venture with O’Connor Capital
Partners allows us to continue to manage and retain majority
ownership of the assets while maintaining a strong balance sheet.
Proceeds from this joint venture have resulted in the reduction of
leverage which positions WPG as one of the best within the U.S.
Regional Mall REIT sector from a leverage standpoint.”
William Q. O’Connor, President and CEO of O’Connor Capital
Partners added: “Building on our partnership with Washington Prime
Group by concluding this transaction fits well with our investment
strategy. These are high-quality, open-air retail properties, all
located in robust markets and leased to prime tenants, with a
variety of amenities that provide what is essentially a destination
shopping experience.”
Washington Prime Group will retain management and leasing
responsibilities of the properties. In addition, redevelopment
costs associated with the properties will now be a shared expense
between the two companies. Washington Prime Group has an existing
joint venture with O’Connor for five of the Company’s properties
and certain related outparcels.
Founded in 1983, O’Connor Capital Partners is an institutional
real estate investment, management, and development firm based in
New York City and run by President and CEO, William Q. O’Connor.
The firm pursues acquisitions, developments and conversions on
behalf of its institutional funds, separate accounts, and own
account. O’Connor primarily targets retail and residential
opportunities throughout the U.S. and Mexico. Since inception,
O’Connor has acquired or developed over $30 billion of property,
including over 55 million square feet of retail space and over
30,000 residential units globally.
About Washington Prime Group
Washington Prime Group Inc. is a retail REIT and a recognized
leader in the ownership, management, acquisition and development of
retail properties. The Company combines a national real estate
portfolio with an investment grade balance sheet, leveraging its
expertise across the entire shopping center sector to increase cash
flow through rigorous management of assets and provide new
opportunities to retailers looking for growth throughout the U.S. A
trademark application has been filed with the U.S. Patent and
Trademark Office for the name “Washington Prime Group” and is
currently pending. Learn more at www.washingtonprime.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995
which represent the current expectations and beliefs of management
of Washington Prime Group Inc. (“WPG”) concerning the proposed
transactions, the anticipated consequences and benefits of the
transactions and the targeted close date for the transactions, and
other future events and their potential effects on WPG, including,
but not limited to, statements relating to anticipated financial
and operating results, the company’s plans, objectives,
expectations and intentions, cost savings and other statements,
including words such as “anticipate,” “believe,”, “confident”,
“plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,”
and other similar expressions. Such statements are based upon the
current beliefs and expectations of WPG’s management, and involve
known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance, or achievements of WPG to be
materially different from future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, without limitation: changes in
asset quality and credit risk; ability to sustain revenue and
earnings growth; changes in political, economic or market
conditions generally and the real estate and capital markets
specifically; the impact of increased competition; the availability
of capital and financing; tenant or joint venture partner(s)
bankruptcies; the failure to increase mall store occupancy and
same-mall operating income; risks associated with the acquisition,
development, expansion, leasing and management of properties;
changes in market rental rates; trends in the retail industry;
relationships with anchor tenants; risks relating to joint venture
properties; costs of common area maintenance; competitive market
forces; the level and volatility of interest rates; the rate of
revenue increases as compared to expense increases; the financial
stability of tenants within the retail industry; the restrictions
in current financing arrangements or the failure to comply with
such arrangements; the liquidity of real estate investments; the
impact of changes to tax legislation and WPG’s tax positions;
failure to qualify as a real estate investment trust; the failure
to refinance debt at favorable terms and conditions; loss of key
personnel; material changes in the dividend rates on securities or
the ability to pay dividends on common shares or other securities;
possible restrictions on the ability to operate or dispose of any
partially-owned properties; the failure to achieve earnings/funds
from operations targets or estimates; the failure to achieve
projected returns or yields on development and investment
properties (including joint ventures); expected gains on debt
extinguishment; changes in generally accepted accounting principles
or interpretations thereof; terrorist activities and international
hostilities; the unfavorable resolution of legal proceedings; the
impact of future acquisitions and divestitures; assets that may be
subject to impairment charges; significant costs related to
environmental issues; and other risks and uncertainties, including
those detailed from time to time in WPG’s statements and periodic
reports filed with the Securities and Exchange Commission,
including those described under “Risk Factors”. The forward-looking
statements in this communication are qualified by these risk
factors. Each statement speaks only as of the date of this press
release and WPG undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events or
circumstances. Actual results may differ materially from current
projections, expectations, and plans, if any. Investors, potential
investors and others should give careful consideration to these
risks and uncertainties.
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version on businesswire.com: http://www.businesswire.com/news/home/20170515006645/en/
Washington Prime Group Inc.Lisa A. Indest, CAO & Senior VP,
Finance, 614-887-5844lisa.indest@washingtonprime.comorKimberly A.
Green, VP, Investor Relations & Corporate Communications,
614-887-5647kim.green@washingtonprime.com
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