Glimcher to Get Full Control of Its Scottsdale Quarter Development Project
Glimcher Realty Trust has entered into agreements to purchase the land for all three phases of its Scottsdale Quarter development project in Arizona from affiliates of an existing joint venture partner. The total purchase price is approximately $120 million. Upon the closing of the transactions covered by the purchase agreements, the existing joint venture arrangement will be terminated, giving Glimcher full control and ownership over all improvements, in addition to the land. Upon closing, the joint venture partner will be released from all obligations related to the project.
“Having full control of both the ground and the improvements enhances the overall value of our investment in this premier property,” said Michael Glimcher, board chairman/ceo.
Scottsdale Quarter includes approximately 600,000 square feet of premium retail and office space in the heart of Scottsdale, and is currently owned by a joint venture, of which Glimcher has a 50 percent interest. Phase I of Scottsdale Quarter opened in 2009; Phase II is scheduled to come on line in fall 2010. The land for the first two phases of the project is currently owned by Glimcher’s joint venture partner and is leased to the joint venture. The ground lease has a term of 99 years and has an annual ground lease payment of approximately $5.5 million a year with certain escalations in payment over the term of the lease. The third phase constitutes undeveloped land adjacent to the first two phases that was initially planned to be developed independently by Glimcher’s joint venture partner with the retail component being delivered to Scottsdale Quarter through condominium rights. Under the purchase agreements, the partner’s interest in the land, ground lease, and in the joint venture will be conveyed to Glimcher subsidies. The third phase may be developed by Glimcher for retail, hotel, office and/or residential use.
The company expects to fund the acquisition through approximately $85 million of mortgage debt with the remainder to be funded through availability under its credit facility. The purchase of the Phase I and Phase II land is expected to occur in September 2010. The Phase III land purchase, along with the termination of the joint venture, is expected to close in October.