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May 13, 2016  

Wells, JP Morgan Backing Blackstone Deal

Wells Fargo and J.P. Morgan are putting together a syndicate for a $918 million debt package that will finance Blackstone’s pending acquisition of a shopping-center portfolio.

Blackstone has agreed to buy the 49 U.S. shopping centers from RioCan REIT of Toronto for about $1.9 billion.

The floating-rate debt package led by Wells and J.P. Morgan will be backed by 27 of the properties, encompassing 5.5 million square feet. Those shopping centers are valued at some $1.2 billion. Fourteen are in Texas, seven are in Pennsylvania, and the others are in New Hampshire, New Jersey and New York.

The debt package will encompass a $740 million senior loan and $178 million of mezzanine debt. It will have a two-year term, with three one-year extension options.

Wells is the administrative agent, and J.P. Morgan is the syndication agent. They are seeking to syndicate the senior portion, pegged to about 225 bp over one-month Libor. It’s unknown if they have already placed the mezzanine component.

With the sale, RioCan is cashing out of all of its U.S. holdings. The shopping centers — most anchored by supermarkets — have increased in value by about C$930 million ($725 million) since being acquired between 2009 and 2015, the REIT said, adding that the sale would result in a 16% internal rate of return.

At the same time, RioCan is unwinding a partnership with Kimco Realty of Hyde Park, N.Y. RioCan is buying out Kimco’s share in 22 Canadian retail properties that they own jointly for $715 million, plus the assumption of debt. Some of the proceeds from the U.S. sale will be plowed into the Canadian acquisition.

Blackstone, acting via its $15.9 billion Blackstone Real Estate Partners 8 fund, struck its purchase agreement in December. At the time, RioCan said it expected the deal to close by April 30. Two weeks ago, the REIT said the transaction was expected to be completed by the end of August.