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Blackstone and Glimcher form joint venture

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The Blackstone Group and Glimcher Realty Trust have formed a partnership for the acquisition and management of two regional malls.

The assets for the joint venture will consist of two existing Glimcher mall properties: Lloyd Center in Portland, Oregon and WestShore Plaza in Tampa, Florida.

The gross value for the combined transaction is approximately USD320m which would include assumption of the approximately USD218m in mortgage loans currently in place on the properties.

The transaction is expected to generate net proceeds of approximately USD60m to Glimcher after considering debt assumption and typical closing costs. These proceeds will be used to reduce amounts outstanding under Glimcher’s credit facility.

The joint venture will acquire the entities that own these two properties. An affiliate of Blackstone will acquire 60 per cent of the joint venture and Glimcher will retain the remaining 40 per cent interest.

The transaction requires a USD6.3m security deposit, which is non-refundable provided the consent of existing first mortgage lenders is obtained and customary tenant estoppels are received.

The transaction is anticipated to close in December 2009.

In connection with the transaction, Glimcher Properties has made customary representations and warranties. It will continue to manage the operation of the two properties.

"We look forward to jointly evaluating additional mall acquisitions in the future. We are excited about forming this new relationship with Blackstone, a highly-respected and strategic investor, which furthers our goal of raising capital through the partial sales of our Lloyd Center and WestShore properties. This relationship will help Glimcher in the near-term while also positioning us to benefit from the economic recovery when it occurs," says Michael P. Glimcher, chairman of the board and chief executive of Glimcher.

"We are pleased to find in Glimcher an experienced and proven team to partner with," says Jonathan D. Gray, senior managing director of Blackstone. "We believe there should be regional malls available at attractive pricing during this cycle.”

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