Regency Centers Corporation (NYSE:REG) (the “Company”) announced today that it has entered into an agreement to sell a 15-property portfolio (the “Portfolio”) to an affiliate of Blackstone Real Estate Partners VII (“Blackstone”) for total consideration of $321.0 million representing a weighted average cap rate of 8.1%. The Portfolio is 90.3% leased, includes 2.1 million leasable square feet and is unencumbered by debt. All properties are wholly owned by the Company. Closing of the transaction is expected to occur on July 25, 2012. See Exhibit I to this press release for a complete listing of the properties.
The Company will maintain an approximate $47.5 million preferred equity investment in the Portfolio, which will earn an annual preferred return of 10.5%. This preferred investment cannot be redeemed prior to the 12-month anniversary of the closing date. Following the 12-month anniversary, Regency may call for the redemption of its preferred investment in whole or in part. Following the 18-month anniversary, each of Regency or Blackstone may initiate the redemption of Regency’s preferred investment, in whole or in part. Regency will not provide leasing or management services for the Portfolio after closing.
“The sale of these non-strategic assets is consistent with the stated objective for our capital recycling program this year, which is to be a net seller and to reinvest the proceeds into dominant, grocery-anchored shopping centers located in target markets with excellent prospects for growth and to reduce leverage," said Hap Stein, Chairman and Chief Executive Officer.
As a result of entering into this agreement, Regency has recognized a net impairment loss of approximately $20.0 million in the second quarter of 2012 and is increasing full-year 2012 pro-rata disposition guidance by $200 million to a range of $400-$500 million. Additional information will be provided in conjunction with the Company's second quarter earnings release and earnings conference call, scheduled for July 31 and August 1, 2012, respectively.