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REIT Teams With Singapore Sovereign Wealth Fund, Aims To Buy $1.2B In Retail Assets

Publicly traded REIT RPT Realty is teaming up with Singapore's sovereign wealth fund GIC Private Limited, as well as Zimmer Partners and Monarch Alternative Capital, to create a new real estate investment platform seeking to invest in over $1.2B in commercial real estate leases in the coming years, the REIT said last week.

The new platform, called RGMZ, "will target $1.2 to $1.3B of acquisitions of essential, resilient and high credit tenants over the next three years subject to long-term, net leases," an investor presentation says.

Funds from the platform will be invested in open-air retail in multiple cities including Detroit, Tampa Bay, Denver, Indianapolis, Cincinnati, Atlanta, Miami, New York City, Chicago and Washington, D.C.

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RPT's portfolio includes 49 open-air centers in 14 states. 

The announcement said that GIC, Zimmer, Monarch and RPT have committed to fund $470M in the platform over the next three years for approved acquisitions.

"The platform is to be seeded with 42 single-tenant, net lease retail assets that have been or will be created by RPT upon the subdivision of certain parcels from its existing open-air shopping centers located in top 40 metropolitan areas. The initial seed was valued at $151M and represents only 6% of RPT’s fourth quarter 2020 annualized base rent," the REIT's statement said. 

RPT intends to retain a 6.4% stake in the platform, manage the portfolio day-to-day, and earn management, leasing and construction fees. RPT plans to expand into higher-growth and lower-risk markets and to reduce leverage.

“We believe the current dislocation in the open-air retail sector compared to the triple-net lease sector has created unique investment opportunities based on our extensive analysis," RPT Realty President and CEO Brian Harper said in the statement. "Retail is a prime driver of the U.S. economy, whether delivered through ‘brick and mortar’ or online, and both require a strong infrastructure to drive results.

"The current market disruption has further highlighted the need to service the entire retail distribution chain without regard to the specific form of distribution. We believe this platform is our first step in recognizing this paradigm shift and should enable us to capitalize on these strategic opportunities and position the company to continue creating significant value for our shareholders. It will also provide RPT with a greater competitive advantage in growing our portfolio of assets in an accretive manner. It’s a win-win for shareholders and our new platform’s investors,” Harper said.

“As a long-term investor, we believe there are opportunities in the retail net-lease sector to acquire high-quality assets with strong tenant credit at attractive pricing," said Lee Kok Sun, chief investment officer of real estate at GIC. "We expect to create value in identifying pricing inefficiencies between different tenant and property types within the retail sector. We are pleased to grow our strategic partnership with RPT, and look forward to scaling the joint venture together.”