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Midwest retail shopping center operator Inland Real Estate (UNKNOWN: IRC.DL ) entered into an agreement to buy out for $121 million cash the 50% interest in the IN Retail Fund that it doesn't already own.
The fund operates 13 shopping centers, including 11 in the Chicagoland area, representing approximately 2.3 million square feet of gross leasable space. The stake Inland is purchasing is currently held by the New York State Teachers' Retirement System and the total value of the properties are estimated at $395.6 million. As of March 31, the portfolio was 97.5% leased and financial occupancy of the portfolio was 93.4%.
Noting the joint venture between the real estate investment trust and NYSTRS was formed back in 2004, Inland Real Estate President and CEO Mark Zalatoris said: "This venture has been a capital-efficient way for the Company to acquire premier retail assets while enhancing our yield on investment. However, the opportunity to acquire NYSTRS's interest at this time advances our strategic goals to increase the size and quality of our consolidated portfolio, simplify our ownership structure and strengthen our balance sheet."
The closing of the transaction must occur by June 14, though the purchase price will increase by $22,500 for each day after May 31 that the closing does not occur. If it doesn't occur by June 14 for any reason, the agreement will terminate and the parties will have no further rights or obligations, and Inland Real Estate will simply continue to own a 50% interest in IN Retail.
Inland owns interests in 154 investment properties, including 48 owned through its unconsolidated joint ventures, with aggregate leasable space of approximately 15 million square feet.