Blackstone Buys 15 Retail Centers from Regency for $321M

Regency Centers Corp. has agreed to sell 15 shopping centers in seven states to an affiliate of Blackstone Real Estate Partners VII for $321 million.

Regency Centers Corp. has agreed to sell 15 shopping centers in seven states to an affiliate of Blackstone Real Estate Partners VII for $321 million. The 2.1 million-square-foot portfolio is 90.3 percent leased and features prominent retail chains like Publix, Kroger, Walgreens, Home Depot and Lowes.

The deal is expected to close July 25. Regency Centers will keep a preferred equity investment of about $47.5 million.

The portfolio, which had no debt, was wholly owned by Regency. The Jacksonville, Fla.-based REIT will not provide leasing or management services for the portfolio after the closing. Six of the centers are in Florida – one each in Port St. Lucie, Sarasota and Fort Myers and three in Stuart. Three California centers – located in Modesto, Fresno and Riverside – were part of the sale. Two Dallas shopping centers were sold, along with one each in Raleigh, N.C.; Akron, Ohio; Nashville; and Chicago.

Regency is known for what it calls its “capital recycling model.” Since 2001, the company has sold $3 billion in assets in desirable markets.

“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, Regency chairman & CEO.

In the first quarter of 2012, Regency sold two wholly owned properties at a gross sales price of $23.1 million and two out-parcels for $7.4 million, according to the company’s first-quarter filing with the U.S. Securities and Exchange Commission. Also in the first quarter, Regency sold two co-investment properties for $80.5 million. Its share of the sales price was $19.8 million.

Regency has been developing several projects this year, including a 280,113-square-foot Safeway-anchored center in a Seattle-area master-planned community that broke ground last month. The first quarter earnings report noted that as of March 31, Regency had 10 projects in development with estimated net development costs of $217.7 million and six redevelopment projects underway costing about $29.8 million. Regency has developed 207 shopping centers since 2000, for an investment of about $3 billion. Overall, it has 365 retail properties, including co-owned centers, for a total of 49.8 million square feet.

Meanwhile, Blackstone has been on a retail spending spree for more than a year, dating back to its early 2011 acquisition of a 588-property portfolio from Centro Properties Group for $9.4 billion. Late last month, Blackstone Real Estate Partners VII also closed on a $1.4 billion joint venture with DDR Corp., purchasing a 46-property shopping center portfolio from EPN Group. In late December, the same Blackstone fund bought a 3.9 billion-square-foot retail portfolio from Equity One Inc. for $473.1 million.