New Plan Excel Realty Trust and JPMorgan Fleming Asset Management announced plans to form a joint venture to buy community and neighborhood shopping centers throughout the United States during the next two years. New Plan Excel is contributing $30 million in equity, or 20 percent, while JPMorgan is contributing $120 million in equity, or 80 percent. With leverage of 60-65 percent, the total joint venture size will be about $400 million. A promote structure in the deal shifts the 80/20 split to a 60/40 split if leveraged returns exceed 12 percent. As the joint venture's managing member, New Plan Excel will initiate acquisitions and provide management and leasing services for acquired properties.
The joint venture will allow New Plan Excel to purchase assets with cap rates below 8 percent, according to Citigroup Smith Barney analyst Jonathan Litt. The venture's first purchase is Lake Grove Plaza, a 251,235-square-foot, Stop & Shop-anchored center in Lake Grove, N.Y., for $44 million. Though the cap rate was not disclosed, Litt estimates it in the 7.5-8 percent range.