Cedar Realty Trust Exits 22-Asset JV with RioCan, Buys Mass. Asset
Port Washington, NY-based Cedar Realty Trust, Inc. (NYSE: CDR) has reached an agreement with RioCan Real Estate Investment Trust (RioCan) (TSX: REI.UN) to exit the 20% Cedar / 80% RioCan joint venture that owns 22 retail properties.
As part of the deal, Cedar will acquire RioCan's 80% ownership interest in Franklin Village located in Franklin, Mass for approximately $60.1 million including the assumption of the related in-place mortgage financing of $34.7 million.
Cedar will sell its 20% ownership interest in the remaining twenty-one joint venture properties for approximately $119.5 million including the assumption of related in-place mortgage financings of $54.4 million.
The valuation of all properties is based upon a 6.5% capitalization rate.
Cedar will receive approximately $39.0 million of cash as well as a distribution of the Company's share of working capital in the joint venture. Cedar intends to use the cash proceeds to repay mortgage obligations with a weighted-average interest rate of 6.5% that are pre-payable during the fourth quarter of 2012 and the first quarter of 2013.
Cedar will continue to manage the properties acquired by RioCan and receive management related fees, subject to a one-year management agreement terminable by RioCan on 90 days notice.
Cedar is implementing over the next twelve months cost reduction measures, consisting primarily of employee headcount reductions and third party vendor cost savings aggregating between $2.0 and $2.5 million per year.
"The benefits to our Company include gaining 100% ownership of a premier New England grocery anchored shopping center and generating cash for repayment of relatively high interest rate debt," said Bruce Schanzer, President and Chief Executive Officer of Cedar in a statement.