Glimcher Selling Lloyd Center for $192M

PORTLAND, OR-Glimcher Realty Trust said this week it is selling the Lloyd Center, a well leased 1.42 million-square-foot regional mall in the CBD here for $197 million. The price is just $29 million more than it paid for the asset more than a decade ago and slightly less than price at which the mall REIT has it on its books. The sale is slated to close in December.

The buyer is Merlone Geier Partners ninth private equity fund, Merlone Geier Partners IX LP. The price includes the assumption of a $127.5-million mortgage loan on the property. The loan, which requires monthly payments of principal and interest, currently has a fixed 5.42% interest rate. It may be prepaid without penalty beginning on June 11, 2013, after which the interest rate accelerates, according to SEC filings.

Lloyd Center is an enclosed regional mall in the Portland CBD with an ice rink. The mall is anchored by Macy’s, Nordstrom and Sears, as well as Barnes & Noble, Marshall’s, Ross Dress for Less and Lloyd Mall Cinemas. The mall’s square footage includes more than 100,000 square feet of office space on the third level that is anchored by Apollo College. The in-line non-anchor space totals 711,000 square feet and was 94.7% leased; sales per square foot were $379, according to Glimcher’s SEC filings.

Nordstrom and Sears own their own land and buildings. The first anchor lease to come up for renewal will be Macy’s in January 2011. Barnes & Noble’s lease rolls one year later, as does the lease for the cinemas. Marshall’s lease rolls in January 2014 and the lease for Ross Dress expires in January 2015. Apollo College’s lease expires in November 2018.

Glimcher acquired the property in September 1998 for $168 million, including $47.73 million for the land and $115.22 million for the improvements. The company says it has invested an additional $34.57 million in the property since that time. It is currently carried on the Glimcher’s books at $197.53 million–$38.56 million for the land and $158.97 million for the improvements.

The sale of Lloyd Center Mall is expected to generate net proceeds of approximately $60 million for Glimcher after considering debt assumption and typical closing costs. The transaction is part of Glimcher’s effort to increase liquidity. The effort also includes an $80-million common share offering and an amendment to its $470-milion unsecured credit facility, both of which were announced earlier this week.

The common share offering, which could grow by 15% if underwriters exercise all overallotment options, is being handled by Goldman, Sachs & Co. and KeyBanc Capital Markets Inc. The amended credit facility, for which it has received commitments from all necessary lenders, will provide one year of additional term through the end of 2011 and enhanced flexibility with respect to the key covenants in the facility, the company says.

The term sheet from the lenders for the facility modifies several of the key covenants of the facility including reducing the minimum fixed charges, maximum recourse and maximum leverage covenants. The minimum fixed charges covenant is modified from 1.50 to 1.35, with a further reduction to 1.30 if the Company completes $150 million in asset sales and permanently reduces capacity under the Credit Facility to $350 million. The amendment increases the maximum recourse debt limitation from 20% of its total asset value to 27.5%, assuming the property capitalization rate (used for calculating TAV) is increased from 7.5% to 8.5%.

The facility amendment also increases the maximum leverage covenant from 65% to 72.5%, assuming the property capitalization rate (used for calculating TAV) is increased from 7.5% to 8.5%, with agreed upon reductions to 70% and 67.5% as of March 31, 2010 and March 31, 2011, respectively.