COLUMBUS, OHIO – The local REIT Washington Prime Group has approved a sale leaseback for four properties for USD 98.9 million. A subsidiary of Perennial Investments & Advisors, an institutional fee investor, is acquiring a fee stake in the property at Edison Mall, Fort Myers, FL; Great Lakes Mall in Mentor, Ohio; Irving Mall in Irving, Texas; and Jefferson Valley Mall in Yorktown Heights, NY.
Washington Prime Group will enter into a new 99-year long lease agreement for a lease interest in the land on the properties. However, the REIT will continue to have a royalty share in the improvements during the term of the Master Ground Lease and will continue to manage, lease and develop the properties.
The master ground lease includes fixed annual payments to the ground lessor and includes annual rental escalators over the term. The agreement includes an option for the company to repurchase the fee interest on the property at a fixed price in year 30 of the master land lease. If Washington Prime does not exercise this option, the fee interest for both the property and improvements will be carried over to the land tenant at the end of the 99-year term of the land lease.
The deal is a win for Washington Prime, according to CEO Lou Conforti, who notes it has been able to broker the unproductive land component of the property by securing 30 years of capital while maintaining operational and financial control.
Washington Prime has raised $ 206 million in new capital to date, which is 40% of its previously announced department store repositioning plan, according to Conforti.
Washington Prime expects the sale-leaseback transaction to close in the second half of 2019, subject to due diligence and customary closing conditions.
In a separate transaction, Washington Prime Group also agreed to sell 20 additional outparcels to the Four Corners Property Trust for $ 37.8 million. These outparcels are located in Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, New Jersey, Ohio, Pennsylvania, Texas, and Virginia.