UNITED STATES - AEW Capital Management and Weingarten Realty Investors have formed a $229m (€144.2m) partnership for the recapitalization of a US-based retail portfolio, which is expected to benefit an unnamed US pension fund.
A split of the assets will give AEW an 85% holding in the portfolio of 18 retail properties while Weingarten will have a 15% holding, on a venture which is 65% leveraged, or carrying $150m in financing from by Northwestern Mutual Life Insurance Company, at an interest rate of 5.5%.
Equity contributions match the ownership split but AEW made its investment on behalf of a corporate pension fund for which it manages a separate account relationship.
Cap rate on this transaction was in the low to mid 7% range and us based on the current net operating income being produced by the properties.
Pension fund opinion now suggests this kind of a transaction is the best way for pension funds to own retail properties, as many of the better retail portfolios are held by public companies and setting up a joint venture is then the best way to create any sizeable retail portfolio for a pension fund.
Moreover, it would have taken AEW several years to be able to buy these kinds of assets on its own as the Weingarten portfolio covers space worth 2.1million sf (185,806m2) and contains13 supermarket anchored shopping centers along with one regional power centre and four neighborhood retail centres.
All of the real estate is based in Texas, as 15 of the properties are in Houston, with one each in Galveston, San Antonio and Amarillo.
The supermarkets in these centres average sales of more than $500 per square foot and the portfolio is more than 95% leased.