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(HOUSTON, TX) - Weingarten Realty Investors and Hines Real Estate Investment Trust Inc., two of the biggest names in commercial real estate circles and both based in Houston, have completed the first half of a joint venture deal that will be valued at $271 million when it closes by year end, the companies have announced.

It is the biggest retail joint venture in the U.S. this year, according to Real Estate Channel research.

A major undisclosed life insurance company is providing a $100 million loan to facilitate the deal, according to Weingarten president and CEO Drew Alexander. Weingarten provided preferred equity of $134 million for the initial closing. The proceeds of the $100 million loan will be used to reduce WRI's preferred equity position.

Drew Alexander

"WRI is extremely pleased to become partners with a world-class organization that also has its deep roots in our wonderful city, Houston," says Alexander.

"We believe this transaction will provide stable and growing returns to the joint venture while also meeting our objective of recycling capital and building our assets under management.


Hines has been a commercial real estate player for over 50 years. Weingarten is celebrating its 60th year in the real estate field.

Under terms of the deal, a subsidiary of Hines REIT will acquire a 70% interest in a WRI portfolio of 12 high-volume supermarket-anchored shopping centers.

The aggregate transaction price is about $271 million. The transaction will close on multiple dates. The initial closing was November 13, 2008 and included eight of the properties for about $205 million. The purchase of the remaining four properties will be closed when certain loans are assumed on the properties.

Drew says the 12 properties consist of 1.5 million square feet across five states that have "very strong demographics with average trade area populations exceeding 100,000 people and average household income exceeding $80,000."

These centers are anchored by a diversified mix of leading grocers including Kroger, Randall's (Safeway), H-E-B, Publix, B.J.'s Wholesale and Harris Teeter. Additional anchors include Marshall's, Barnes and Noble, Palais Royal and Stein Mart.

The supermarkets in these centers average sales of more than $450 per square foot and the portfolio is more than 96% leased.

WRI will be responsible for the ongoing management and leasing of the properties and will receive property management, joint venture management, and leasing fees along with incentive distributions above certain return hurdles.

"We are pleased to acquire an interest in a portfolio of quality supermarket-anchored shopping centers in locations with strong demographics," says Charles Hazen, President and CEO of Hines REIT. "This is our first joint venture with WRI and we are very pleased with this new relationship."

The Dallas office of Holliday Fenoglio Fowler represented WRI's interest in structuring the venture.

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