Plaza Centers to reinvest funds from US sale in CEE

London and Warsaw listed developer Plaza Centers made a profit of around $240 mln (EUR 189 mln) on the sale of a portfolio of 47 US-based shopping centres earlier last week, Ran Shtarkman, CEO of Plaza Centers, told PropertyEU.

Plaza Centers intends to use the proceeds from the sale in two ways: to reduce its debt level and to invest in new projects in the CEE region, India and the US, Shtarkman said. The developer has already completed 31 shopping/entertainment centres in markets such as Hungary, Poland, the Czech Republic and India.

At the end of February, Plaza will open its first shopping/entertainment centre in Serbia.

Plaza sold the portfolio via its joint US subsidiaries EDT Retail Trust and EPN to a joint venture between Blackstone Real Estate and DDR Corp., for $1.42bn including debt of $934mln. The profit made by Plaza Centers and its JV partners includes a $26mln dividend from EDT, Shtarkman, said.

Plaza Centers acquired the US portfolio in June 2010, via its stakes in EPN and EDT. In total, the developer has spent $360mln on acquiring and repositioning the portfolio in the past 18 months and the sale reflects an initial yield of 7.2%, Shtarkman. The portfolio includes shopping centres in states such as New York, Colorado, Connecticut and Florida. Following the sale of the properties, EPN Group will continue to hold two properties in the US that are valued at around $43 mln.

However, according to Shtarkman, Plaza Centers had initially not planned to sell the portfolio for several years: ‘However, the US market is doing well and we realized that it could be a good time to sell, so we approached some potential buyers and also attracted offers from other would-be buyers,’ he explained.

According to Dan Fasulo, managing director of consultancy Real Capital Analytics in New York, retail prices nationwide have increased on average by 20% since the second quarter of 2010: ‘Large investors think this is the right point in the cycle to make a macro bet - Blackstone has been very successful at this,’ he told PropertyEU.

For Blackstone Real Estate, the Plaza portfolio was attractive because ‘it was a proprietary off-market deal where we were able to acquire well-located, high quality assets at a significant discount to replacement value,’ A.J. Agarwal, senior managing director in the real estate group at Blackstone in New York, told PropertyEU.

Last year, funds managed by Blackstone acquired around $10bn in retail properties in the US. Blackstone doesn’t have a target for this year but it is expected to continue to be a big investor in retail assets.

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