RPT Realty (NYSE: RPT) a publicly traded real estate investment trust that owns and operates a portfolio of open-air shopping destinations in the USA, has announced the formation of a new core net lease retail real estate platform.
The new platform has attracted initial investment from a branch of Singapore’s sovereign wealth fund, GIC Private Limited, plus investment from New York hedge fund, Zimmer Partners, and private investment firm, Monarch Alternative Capital LP.
GIC, Zimmer, Monarch and RPT have committed to provide $470m for approved acquisitions to be made by the platform over the next three years. The new fund has a total acquisition target of over $1.2bn.
Lee Kok Sun, Chief Investment Officer of Real Estate, GIC, said, “As a long-term investor, we believe there are opportunities in the retail net lease sector to acquire high-quality assets with strong tenant credit at attractive pricing. We expect to create value in identifying pricing inefficiencies between different tenant and property types within the retail sector. We are pleased to grow our strategic partnership with RPT and look forward to scaling the joint venture together.”
The new platform will be seeded with 42 single-tenant, net lease retail assets, valued at $151m, that have been or will be created by RPT through the subdivision of some of its existing open-air shopping centres.
RPT will retain a 6.4% stake in the platform, will maintain day-to-day management of the portfolio and will earn management, leasing and construction fees. Additionally, RPT will invest up to $70m in preferred equity that will be a component of Zimmer and Monarch’s equity commitment.
The retail property sector has been going through a period of significant upheaval and dislocation, with the pandemic and growth of online shopping reshaping the sector and creating new opportunities for investors.
Brian Harper, President and Chief Executive Officer of RPT Realty, commented, “We believe the current dislocation in the open-air retail sector compared to the triple-net lease sector has created unique investment opportunities based on our extensive analysis. Retail is a prime driver of the U.S. economy, whether delivered through ‘brick and mortar’ or online, and both require a strong infrastructure to drive results.”
Steven Frankel, Principal and Head of Real Estate at Zimmer, stressed the point saying, “The current retail real estate environment is fast moving and at an important crossroads. We chose to partner with RPT because of their commitment to operational excellence and demonstrated ability to capitalize on strategic opportunities. We are excited about the possibilities.”
This is the second time GIC have invested with RPT. In 2019, the pair formed a JV to invest in grocery-anchored shopping centres in second and third-tier markets across the United States.