REAL ESTATE - Regency Centers Corporation has formed a new open-ended investment fund called Regency Retail Partners, LP.
There is a total of $370m(€286m) of equity in the fund now. One of the largest investors in the fund is GIC Real Estate, which is the real estate arm of the Government of Singapore Investment Corporation.
There will eventually be $500m of equity in the fund and 60% leverage. This will give the fund a total capitalisation of $1.2bn.
Lisa Palmer, senior vice president of capital markets for Regency., said: "We had originally looked at the open-ended fund idea six years ago. It wasn’t right at that time. Things have now changed from an investor point of view.
"Many institutional investors have a real interest in investing in REIT portfolios. This has been proven by the success that AMB and ProLogis has had with their open-ended funds. We think we can do just as well."
There are many pension funds around the country that are looking to invest in retail assets. Many would prefer to invest in a public REIT portfolio, as these companies hold some of the highest quality retail in the industry.
Regency has contributed two properties to the Retail Partners fund. This is considered to be the REIT’s equity co-investment to the fund. It’s ownership in the fund is now at 27%. On a long-term basis this will be reduced to 20%.
One of the properties put into the fund was the 370,000ft2 Falcon Ridge Town Center Phase I in Riverside-San Bernardino, Calif. The main anchors for this property are Target and Stater Bros. The centre is fully leased.
The other asset is the 349,000ft2 Indian Springs Market Center in Cincinnati, Ohio. The centre is anchored by a Wal-Mart Supercenter store. There are no vacancies in the property.
The two properties were put in the commingled fund at a total purchase price of $72.6m. The assets have a weighted average cap rate of 6.36%. This yield is based on the current rent in each of the properties.
Retail Partners will have the exclusive rights to buy all of the Regency-developed large format community shopping centres. This would happen once the properties reach stabilisation and that meet the fund’s investment criteria.