Galileo Shopping America Trust has bought a 95% interest in a portfolio of properties in the United States for US$106.5 million.
GSA bought the portfolio from CBL & Associates sold as a part of agreement entered into at the time of the New Plan transaction in July 2005.
As part of the agreement, New Plan will manage the assets and hold a 5% in the portfolio.
The purchase reflects a passing yield of 7.5% and a discount to valuation of 8.9%.
The portfolio includes the Springdale Center and Wilkes Barre Marketplace, known as “Redemption Properties”. The properties were bought by CBL & Associates from Galileo as consideration for their former interest in the Galileo JV Company.
The two centres will now be reacquired for $US63 million.
GSA has also bought the Chicopee Marketplace, Fashion Square and Cobblestone Village II, which are identified pipeline properties acquired pursuant to right of first offer arrangements secured by the Galileo JV Company.
The three centres will be purchased at $US43.5 million.
Galileo Funds Management’s chief executive Neil Werrett said all of the assets have been recently developed or re-developed, and Springdale Center has further expansion potential.
“The acquisition also demonstrates the ongoing strength of our partnership with New Plan, who will undertake management of the assets going forward and acquire a 5% interest in the portfolio as part of the JV Company,” he added.
The purchase will increase GSA’s exposure to the key markets of Florida and the north east markets of Massachusetts and Pennsylvannia.
The portfolio has a weighted average lease expiry profile of 6.8 years.
Following the transaction, GSA’s entire portfolio occupancy rate will increase from 96.7% to 96.9%.
The transaction will be funded via a mix of debt and equity, with an institutional placement of approximately $35 million to be underwritten by UBS AG.
Upon settlement, the GSA will have just over $2 billion worth of properties located in 32 states in the US.
Debt funding for the transaction will be via new fixed rate CMBS debt. Post-transaction gearing remains largely unchanged at 59.3%.
By Adam Parsons
