A subsidiary of Big Shopping Centers (2004) Ltd. (TASE:BIG) has completed its acquisition of 80% of rights to the Outlet of Legends center and a number of adjacent lots for commercial development in Sparks, Nevada.
The 32,000-square meter open-air shopping center has 45 tenants and an 86% occupancy rate. The tenants include anchors such as Nike, Adidas, RED, F21, H&M, and Gap Outlet, as well as a movie theater from the Galaxy Theater chain. Construction of an additional 5,200 square meters is taking place, designated mostly for anchor Burlington Coat Factory, scheduled to open in the second quarter of 2018. The shopping compound also includes shadow anchors not included in the purchased rights, such as Scheels and Low's. A casino is also being constructed, and is scheduled to open in 2019, with two hotels slated for opening in 2020.
The deal also includes 10 lots adjacent to the center with a total of 58,300 square meters for future commercial development, mostly in 1-3 years.
The deal was conducted through a partnership with RED Development, in which Big's subsidiary has an 80% stake, while RED owns the other 20%. The BIG-RED partnership acquired all the rights in the center from RED. RED will continue managing the center for the partnership.
The rights were purchased at a value of $83.34 million for 100% of the rights in the center, reflecting a 6.75% return on the existing net operating income (NOI), including the signed leases for the 5,200 square meters of new space under construction. The price for the land was set at $7.455 million, meaning that the deal reflects a value of $95.8 million for the rights. There are two loans for the sale totaling $51.3 million at an average interest rate of 4.34% (the company is considering refinancing of the loans, which can be conducted without paying an early repayment fee). The subsidiary's share of the price is therefore $76.7 million, meaning that $35.6 million is needed in addition to the loans.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 6, 2017
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