Washington Prime Group Inc. has a signed a definitive agreement for the sale of 41 restaurant outparcels to Four Corners Property Trust Inc. for a purchase price of approximately $67.2 million. This pricing reflects a mid-six percent capitalization rate on in-place net operating income, according to a prepared statement.
Lou Conforti, CEO and Director of Washington Prime Group stated: “Plain and simple, senior management and I have a fiduciary responsibility to act upon arbitrage opportunities especially when the resultant transaction does not in any way whatsoever detrimentally impact the underlying vitality of the enclosed and open-air assets in question.”
He explains that “Selling a long-dated portfolio of outparcels which are leased to restaurant operators exhibits such an arbitrage situation. Four Corners Property Trust is better suited to own the aforementioned outparcels. Deploying proceeds from this transaction to invest in other opportunities is prudent as it allows us to concentrate upon continued financial improvement.”
The transaction is expected to close in two tranches beginning in the fourth quarter of 2017 with the second tranche expected to be completed in the first half of 2018, subject to due diligence and customary closing conditions.
Bill Lenehan, CEO and Director of Four Corners Property Trust added: “Lou and I have worked on numerous transactions over the last decade. This transaction is emblematic of Washington Prime Group’s laser focus on executing day in and day out and it is a real win for our respective shareholders.”
The restaurant outparcels are well located within highly trafficked corridors in Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Maryland, New Jersey, Ohio, Pennsylvania, Texas and Virginia. The outparcels included in the transaction are currently occupied under leases with a weighted average term of eight years, representing approximately $4.5 million of annualized net operating income.
The 10 enclosed properties with outparcels included in the transaction are: Colonial Park Mall, located in Harrisburg, Pennsylvania; Lindale Mall located in Cedar Rapids, Iowa; Longview Mall located in Longview, Texas; Mall at Fairfield Commons located in Beavercreek, Ohio; Markland Mall located in Kokomo, Indiana; Melbourne Square, located in Melbourne, Florida; Mesa Mall located in Grand Junction, Colorado; Orange Park Mall located in Orange Park, Florida; Southern Park Mall located in Youngstown, Ohio; and Sunland Park Mall located in El Paso, Texas.
The 12 open air properties with outparcels included in the transaction are: Bloomingdale Court located in Bloomingdale, Illinois; Fairfax Court, located in Fairfax, Virginia; Gaitway Plaza, located in Ocala, Florida; Greenwood Plus located in Greenwood, Indiana; Lake View Plaza located in Orland Park, Illinois; Rockaway Commons, located in Rockaway, New Jersey; Royal Eagle Plaza, located in Coral Springs, Florida; St. Charles Towne Plaza, located in Waldorf, Maryland; The Plaza at Buckland Hills, located in Manchester, Connecticut; University Town Plaza located in Pensacola, Florida; Village Park Plaza located in Carmel, Indiana; and West Town Corners located in Altamonte Springs, Florida.