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Strategic Property Trust JV Buys 14 Property Portfolio for $79 Million

Strategic Realty Trust Inc., formerly known as TNP Strategic Retail Trust Inc., entered into a joint venture agreement with MN Retail Grand Avenue Partners LLC and GLB SGO MN LLC to purchase 14 retail properties located in Minnesota, North Dakota and Nebraska for approximately $79 million.

Strategic Realty Trust owns a 10 percent interest in the joint venture and contributed $2.85 million in cash. GLB SGO MN, a subsidiary of Glenborough Property Partners, also owns a 10 percent interest and contributed $2.85 million in cash. MN Retail Grand Avenue Partners, a subsidiary of Oaktree Real Estate Opportunities Fund VI, owns an 80 percent interest and contributed $22.75 million.

The joint venture used the capital contributions of the three companies, along with proceeds from a $50.51 million loan from Bank of America, to acquire the properties from Investors Real Estate Trust. The joint venture is also under contract to purchase two additional retail assets from IRET for $1.66 million, which is expected to close in the fourth quarter of 2015.

Glenborough Property Partners is an affiliate of Strategic Realty Trust’s property manager, Glenborough LLC, and an affiliate of their advisor, SRT Advisor LLC.

Glenborough Property Partners will manage and conduct the day-to-day operations and affairs of the joint venture and will earn a monthly asset management fee equal to a percentage of the total investment value of the property. In addition, if Oaktree receives a 12 percent internal rate of return on its contribution, then the joint venture will pay GPP a disposition fee equal to one percent of the total sale proceeds when the properties are sold.

Glenborough will also act as the property manager for the properties and will be paid a monthly management fee equal to 3 percent of the gross revenues collected from the operation of each property. The company will also be paid a construction management fee (on a project-by-project basis) for any construction projects where the cumulative costs exceed $25,000. The construction management fee is equal to 5 percent of the first $300,000 of the cumulative costs; 4 percent of the cumulative costs which exceed $300,000 but are less than or equal to $500,000; and 3 percent of all cumulative costs in excess of $500,000. Glenborough will also earn leasing commissions of 6 percent of the base rent for the first 120 months of the initial term for new leases and expansions of existing leases, and 3 percent of base rent for the renewal term for extensions and renewals of existing leases.

Strategic Realty Trust, is a non-traded real estate investment trust which owns a portfolio of shopping centers that are anchored by such grocers as Publix, Kroger, and Wal-Mart. The company is advised by SRT Advisors LLC, an affiliate of Glenborough LLC, a privately held full-service real estate investment and management company that also acts as the company’s property manager.