KeyBanc Capital Markets has provided a $325 million senior credit facility to ShopOne Centers REIT, a recently launched private real estate investment trust that specializes in grocery-anchored shopping centers, Commercial Observer can first report.
Huntington Bank, Regions Financial Corporation and BBVA Compass were joint lead arrangers on the debt—a four-year loan with an option for a one-year extension. The new facility includes a $150 million revolving component.
Funds affiliated with Davidson Kempner Capital Management hold the bulk of the equity of ShopOne, which launched in October. The investment trust currently has 47 shopping centers in nine states comprising about 5 million square feet, most of which were acquired from Devonshire REIT. Huntington Bank has previously transacted with ShopOne’s predecessor companies, Michael Carroll, ShopOne’s chief executive officer told CO via a spokeswoman.
Part of the new financing replaces existing debt—the majority of which matured simultaneously as the new deal was completed—on 16 retail properties. The remainder of the existing debt debt was set to come due in 2018. The new credit facility improves ShopOne’s debt maturity profile, with the next debt maturity now in late 2021.
The financing will allow ShopOne to upgrade all the properties in its portfolio with the repositioning focusing on physical improvements such as enhanced facades, lighting and signage, according to a statement by Carroll. Additionally, the landlord will try to attract new anchors that have off-price apparel and shops with fast casual restaurants.
The debt will also be used to acquire new shopping centers in primary markets.
The transaction allows ShopOne to “proceed with additional strategic investments that align with our long-term portfolio goals,” John Roche, the chief financial officer of ShopOne, said in a prepared statement. “The combination of capital availability and decades of experience in maximizing value through redevelopment, leasing and property management will enable ShopOne to achieve above market returns in the current environment.”
Earlier this month ShopOne acquired McKinley Crossroads, a three-building center located at 275 Teller Street in Corona, Calif., where the anchor tenants are 24-Hour Fitness and Simply Fresh Market.
And ShopOne acquired Conyers Commons, a two-building shopping center in Conyers, Ga. on Oct. 10. The 118,420-square-foot center is anchored by Ross Dress for Less and Target.
A representative for KeyBanc did not immediately respond to a request for further information or comment via a spokesman.