Acadia sells retail portfolio stake to MSREI, Terranova

The White Plains, New York firm is exiting investments from its third and fourth opportunistic and value-add funds for $342 million.

Acadia Realty Trust has sold its 95 percent stake in a six-building retail portfolio in Miami Beach, Florida to Morgan Stanley Real Estate Investing (MSREI) and Terranova Corporation for $342 million. The transaction closed this week.

Acadia is exiting the investments on behalf of its Acadia Strategic Opportunity Funds III and IV, according to a filing with the US Securities and Exchange Commission. MSREI declined to comment on the transaction, but PERE understands that the New York-based bank’s real estate investment management arm is buying its majority interest in the properties through its Prime Property Fund, a $10 billion open-ended core fund.

Acadia and its joint venture partner, Miami Beach-based Terranova Corporation, originally assembled the portfolio through two acquisitions. Acadia’s $500 million Fund III and Terranova initially purchased two properties on Miami Beach’s Lincoln Road and one on Lincoln Lane totaling 59,700 square feet for $51.9 million in February 2011. Subsequently, Acadia’s Fund IV, which raised $541 million in 2012, and Terranova purchased three additional properties on Lincoln Road totaling 54,900 square feet for $139 million in December 2012.

The Fund III assets sold for $141.8 million, while the Fund IV buildings traded for $200.2 million. Acadia had owned a 95 percent interest in the portfolio, while Terranova held five percent. It was unclear what the ownership structure will be under the new joint venture.

Acadia, a retail-focused real estate investment trust, operates under a dual platform strategy, where it makes core investments directly and opportunistic and value-added investments through a series of discretionary institutional funds. Terranova, a commercial real estate advisory firm, provides a variety of property services but also holds its own commercial real estate portfolio valued at $1 billion.