Plaza Centers N.V., a leading emerging markets property developer, has announced that EDT Retail Trust ('EDT') a wholly owned subsidiary of certain indirect subsidiaries of EPN GP, LLC and EPN EDT Holdings II, LLC (collectively 'EPN'), Plaza's joint US subsidiaries, has reached an agreement, subject to the satisfaction of certain closing conditions, to sell 47 of its 49 US-based shopping centers in a deal totaling US $1.428 billion (approx. 1.125 billion).
The centers, located across 20 US states, are to be acquired by BRE DDR Retail Holdings LLC, a joint venture between Blackstone Real Estate Advisors VII L.P. and DDR Corp.
Of the transaction value of US $1.428 billion, a total of US $934 million (as of December 11, 2011) shall be paid by the way of assumption of the property level debt unless repaid by EPN. In addition, all excess cash within EDT, which currently amounts to US $30 million, will be retained by the vendor.
Following the sale of the 47 properties, EPN Group will continue to hold two properties located in the United States that are valued at approximately US $43 million with total non-recourse secured debt of approximately US $14 million.
The transaction is expected to close in June 2012, and is subject to the completion of a limited due diligence investigation by the purchaser to be completed by the end of January 2012, in addition to the satisfaction of certain other closing conditions.
EPN, in which Plaza owns a circa 22.7% stake, became the major shareholder of EDT in June 2010 in a transaction valued at US $116 million. The ownership process was completed in August 2011 by finalizing an off-market takeover bid for the remaining EDT units at a cost of circa US $242 million and de-listing the EDT Retail Trust from the Australian Stock Exchange. Subsequently, in September 2011, EDT distributed an interim dividend payment of US $26 million to EPN.
The proceeds from the transaction will be subject to deduction of transaction expenses and applicable taxes. The Company does not expect a material impact from the transaction on its income statement, as the properties were measured at fair value in its consolidated financial statements for the previous periods in accordance with International Financial Reporting Standards.
Ran Shtarkman, President and CEO, Plaza Centers N.V. commented: "Today's agreement represents a great success for Plaza and our joint venture partners and is a testament to the talent and expertise of our people. Plaza in conjunction with our joint venture partners acquired a portfolio of high yielding properties at a time when market values were clearly depressed. By utilizing our specialist retail property expertise, we were able to enhance capital and income value through the redevelopment and repositioning of the portfolio.
"This transaction signifies the culmination of all our hard work and efforts, in what has been a highly successful first investment into the US market for Plaza, by delivering a substantial gain on investment in less than two years. The deal clearly demonstrates Plaza's continuing ability to generate significant shareholder value in even the most difficult of trading and economic conditions. Plaza will continue to seek and identify such opportunities to utilize our retail property expertise in its efforts to maximize profits on behalf of our shareholders."
Source: FTI Consulting