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Blackstone Forms Venture for $2 Billion Shopping-Center Deal

Blackstone Group LP (BX) formed a venture with DDR Corp. (DDR) to buy 76 shopping centers from American Realty Capital Properties Inc. (ARCP) for $2 billion including assumed debt.

The Blackstone Real Estate Partners VII fund will own 95 percent of a venture formed to purchase the properties, with DDR owning the rest, the companies said in a statement today. American Realty said last month it planned to sell the multitenant shopping centers to Blackstone to fund its purchase of Red Lobster’s real estate portfolio.

In January, Blackstone teamed up with DDR to buy 46 U.S. shopping centers for $1.43 billion from a unit of Elbit Imaging Ltd. Retail landlords are benefiting from rising retail sales, which rose 0.3 percent in May following a revised 0.5 percent gain in April, Commerce Department figures showed today.

The latest transaction will “produce attractive risk-adjusted returns while securing access to acquisition opportunities in the future,” Daniel B. Hurwitz, chief executive officer of Beachwood, Ohio-based DDR, said in the statement.

The venture plans to sell 29 of the properties, Joseph Tichar, senior vice president of corporate operations at DDR, said in an e-mail.

“We are in the process of evaluating assets within the portfolio that do not meet the joint venture’s investment thesis,” Tichar said.

The proposed deal includes debt of $461 million and about $800 million of new financings, according to the statement. The properties have combined space of 16.4 million square feet (1.5 million square meters).

DDR has the right of first offer to buy 10 of the assets, according to the statement. The deal is expected to close in the third quarter.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net Andrew Blackman, Christine Maurus

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