Schroder Real Estate Associates of New York has raised $72.5m from European investors to finance the expansion of four regional shopping centres in the US: Orlando Fashion Square, Florida; Rogue Valley Mall, Oregon; Magic Valley Mall, Idaho; and Northcross Mall, Texas.
Merrill Lynch in London lead-managed the issue of AAA-rated LIBOR-based floating rate notes which will be used to replace long-term debt; interest will fall from nearly 6% to just under 4%. The properties are held by Schroder’s closed-end $225m Fund A, set up in 1988 with cash investments of $162m from company and public pension funds.
“It is very difficult to get loans of this size in the US now – life companies and banks just aren’t lending on property,” says Mark Peskin, Schroder’s managing director in New York. “European companies are buying paper more easily than US ones; the spreads they require are not so high.”
And, in its first deal, another Schroder vehicle, its Value Enhancement Fund B, has acquired a 227,000-sq ft office and retail development in downtown Washington DC from troubled developer Kaempfer. The fund has paid down some of Kaempfer’s debt on the property and extended outstanding loans forward for seven years on better terms.
