Washington Prime Group to Acquire Four Sears Stores Located at Tier One Assets through a Sale-Leaseback
March 12 2018 - 4:07PM
Washington Prime Group Inc. (NYSE:WPG) today announced that it has
signed a definitive agreement to acquire through a sale-leaseback
transaction four Sears department stores and four adjacent Sears
Auto Centers (collectively, the “Properties”) located at Tier One
assets. The purchase price is approximately $28.5 million, and
Washington Prime Group (the “Company”) expects to complete the
acquisition during the second quarter of 2018, subject to due
diligence and customary closing conditions.
The Company will have control of these
Properties for future redevelopment. Sears will continue to operate
the Properties under new leases with the Company. Aggregate base
rent under these leases is approximately $1.25 million per annum.
In addition, Sears will be responsible for paying common area
maintenance charges, taxes, insurance and utilities.
Lou Conforti, CEO and Director stated: “When
Washington Prime Group is presented with the opportunity to improve
a Tier One asset via retrofit of an underutilized department store
space, it is imperative we act accordingly. The first step is to
gain control of the space in question, and in this light we have
recently agreed to purchase these Properties at competitive terms
and conditions. Sears will continue to operate these locations for
a period of time that provides us with a suitable timeframe to
evaluate the best adaptive reuse.”
“As exhibited by our previous redevelopment
successes, the aforementioned acquisition allows us to further our
charter of creating hybrid town centers which capture both open air
and enclosed retail space as well as assessing the viability for
non-retail use,” Conforti added. “I would also like to mention we
look forward to working with Sears as they continue their
omnichannel transformation and stand ready to assist regarding this
undertaking as warranted.”
Upon completion of the acquisition, the Company
will have the right to terminate each store lease under certain
circumstances as stated in each lease. Termination cannot occur
between November 1 of a calendar year and January 15 of the next
following calendar year. In the event Sears decides to no longer
operate these locations, the Company will have the right to
terminate the applicable lease upon thirty days’ prior written
notice.
The Properties are located at the following Tier
One assets: Longview Mall, located in Longview, Texas; Polaris
Fashion Place, located in Columbus, Ohio; Southern Hills Mall,
located in Sioux City, Iowa; and Town Center at Aurora, located in
Aurora, Colorado.
As part of its ongoing anchor repositioning
efforts, the Company plans to redevelop these Properties to further
diversify tenancy and strengthen the asset’s dominant positioning
within its respective marketplace. Additional details on the
redevelopment projects will be announced in the future.
About Washington Prime
GroupWashington 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. Washington Prime Group® is a registered
trademark of the Company. Learn more at
www.washingtonprime.com.
ContactsLisa A. Indest, CAO
& Senior VP, Finance, 614.887.5844 or
lisa.indest@washingtonprime.com Kimberly A. Green, VP, Investor
Relations & Corporate Communications, 614.887.5647 or
kim.green@washingtonprime.com
Forward-Looking StatementsThis
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 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,” “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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