GIC Invests in US Open-Air Mall Platform Led by RPT Realty
Posted on 03/04/2021
RPT Realty (NYSE: RPT) is a publicly traded real estate investment trust that owns and operates a portfolio of open-air shopping destinations principally located in U.S. markets. Despite chaos in the retail space, RPT Realty formed a new core net lease retail real estate platform with Singapore’s GIC Private Limited, Zimmer Partners, and Monarch Alternative Capital LP. GIC is seeing opportunities in the retail net lease sector to acquire high-quality assets with strong tenant credit at attractive pricing.
GIC, Zimmer, Monarch and RPT have committed to fund US$ 470 million in the real estate platform over the next three years for approved acquisitions, including the initial investment portfolio that is to be seeded by RPT. The real estate platform will target the acquisition of over US$ 1.2 billion of strategic assets, creating a scalable, stable-growth investment platform.
The platform will seek to acquire net lease retail assets, including assets that have been sub-divided from a select set of currently owned RPT open-air centers as well as future RPT acquisitions. As a result, the platform will facilitate the bifurcation of RPT owned shopping center revenues by segregating tenant cash flows based on growth profiles, retail use and credit, while allowing RPT to retain the tenant synergies of the separated components.
The Platform is to be seeded with 42 single-tenant, net lease retail assets (the “Initial Seed”) that have been or will be created by RPT upon the subdivision of certain parcels from its existing open-air shopping centers located in top 40 metropolitan areas. The Initial Seed was valued at US$ 151 million and represents only 6% of RPT’s fourth quarter 2020 annualized base rent. The Initial Seed is expected to close in phases. RPT will retain a 6.4% stake in the Platform, will maintain day-to-day management of the portfolio and will earn management, leasing and construction fees. Additionally, RPT will invest up to US$ 70 million in preferred equity that will be a component of Zimmer and Monarch’s equity commitment and will not be a direct obligation of the Platform. The formation of the Platform will create a durable fee income stream and enhance the efficiency of RPT’s existing general and administrative expenses as committed capital is deployed. The Company intends to use the proceeds from the initial seeding of assets to opportunistically accelerate its portfolio expansion into higher-growth and lower risk markets and to reduce leverage.
To date, the platform has received commitments for a US$ 175 million secured credit facility, subject to final loan documentation. The Platform expects to close on the syndication of the facility in March of 2021, subject to the satisfaction of certain conditions. The facility will include an accordion feature that allows the Platform to increase future potential commitments up to a total capacity of US$ 500 million.
Monarch Alternative Capital LP is a global investment firm founded in 2002 with approximately $9 billion in assets under management.
In December 2020, RPT Realty sold two land parcels for aggregate gross proceeds of US$ 1.4 million. RPT Realty had no acquisitions during 2020. In December 2019, RPT Realty acquired a 76,000 square foot Target shadow-anchored shopping center in Austin, Texas for US$ 33.9 million. RPT Realty also sold two shopping centers and one land outparcel for aggregate gross proceeds of US$ 69.4 million in the first half of 2019.
On December 10, 2019, RPT Realty contributed five properties valued at US$ 244 million to a newly formed joint venture with an affiliate of GIC, referred to as R2G Venture LLC (“R2G”), and received US$ 118.3 million in gross proceeds for the 48.5% stake in R2G that was acquired by GIC. Additionally, GIC committed up to US$ 200 million of additional capital to R2G over a three year period to fund its 48.5% share of up to an aggregate of US$ 412.4 million of potential acquisitions by R2G of grocery-anchored shopping centers in target markets in the U.S. RPT retained a 51.5% stake in R2G and receives property management, construction management and leasing fees from R2G.