Blackstone to buy 67% stake in US retail portfolio

The Blackstone Group has agreed to acquire UBS Wealth Management North American Property Fund’s equity interest in two retail joint ventures with Kimco Realty for about $1.1 billion, according to a transcript from the retail real estate investment trust’s fourth quarter earnings call last week. The joint ventures own 40 shopping centers comprising approximately 5.6 million square feet.

About 60 percent of the portfolio's value is concentrated in California, New York and the Washington, DC metropolitan areas. Properties include 280 Metro Center, a 213,532-square-foot shopping center in Colma, California; the 437,105-square-foot Airport Plaza in Farmingdale, New York; and Dulles Town Crossing, a 799,459-square-foot retail property in Sterling, Virginia. Blackstone will pay about $274 million in cash and assume $463 million of debt for its majority stake, according to an article in The Wall Street Journal. 

The transaction, which is expected to close during the second quarter, will be made on behalf of the firm's latest global opportunity fund, Blackstone Real Estate Partners VII. Blackstone declined to comment and Kimco did not immediately respond to a request for comment. 

Kimco currently owns 18 percent of the combined ventures, but the REIT reached a preliminary agreement with Blackstone to increase its ownership stake in the properties to 33 percent. It will continue to manage the assets on behalf of the new joint venture.

“We have a great working relationship with them,” said David Henry, Kimco’s chief executive, during the call. He noted that the REIT previously had worked with Blackstone in 2011, when Kimco sold its remaining interest in the Valad convertible notes to Blackstone Real Estate Partners VI for A$165 million (€126.6 million; $169 million), and also had advised Blackstone on its acquisition of Centro Properties Group US, now known as Brixmor Property Group. “We value them, and we hope to do other things with them in the future,” he added.