CBRE Group Inc. has just closed what it says is one of the most expensive trades of an open-air retail center in the U.S. this year.
What’s more, the center in question happens to be outside the primary markets.
An institutional pension fund advisor acquired The Pinnacle at Turkey Creek, a 659,208-sq.-ft. open-air lifestyle/power center in Knoxville, Tenn., from the joint venture of Colonial Properties Trust and Turkey Creek Land Partners LLC for $131.7 million.
According to market sources, the center traded at a cap rate somewhere between low and mid 7 percent.
Colonial Properties Trust and Turkey Creek Land Partners both held a 50 percent stake in the asset.
In spite of being located outside the gateway cities, the preferred destination for institutional real estate investors at the moment, The Pinnacle at Turkey Creek received offers from more than 10 bidders during the 60 days it was out on the market, according to Chris Decoufle, a broker with CBRE’s national retail investment group, who along with Paul Gaither represented the seller in the transaction. The center reportedly has tenant sales productivity that’s comparable to class-A centers in primary markets.
According to the ICSC Directory of Major Malls, there are approximately 236,132 people living within 10 miles of the property, with the average household income of $80,562 per year.
"This represented the ability for an institutional investor to get above average returns from a pure class-A asset that was not in a first-tier market," Decoufle says. "It’s a better yield and overall return. We are seeing [more interest in deals like that] in the marketplace now."
The Pinnacle at Turkey Creek is currently 92.5 percent occupied. Regal Cinemas, Belk, Best Buy, Bed Bath & Beyond, Marshalls, hhgregg and Cost Plus World Market anchor the property. There is also a vacant 22,000-sq.-ft. Borders on the site that offers the new owners a remerchandising opportunity, according to Decoufle.
Colonial Properties’ 50 percent interest was sold for total consideration of $65.9 million, comprised of $27.2 million in cash and the assumption and/or repayment of the company’s $38.7 million share of the existing loans secured by the property. Colonial plans to use its proceeds from the sale to repay a portion of the outstanding balance on its unsecured line of credit, with the rest going toward acquisition of multifamily communities.
“The disposition of our joint venture interests in these retail assets is another step in the execution of our strategy to simplify the business and sell our non-core assets,” Colonial Properties Chairman and CEO Thomas H. Lowder said in a statement.
The joint venture of Inland Real Estate Corp. and PGGM acquired two retail properties in separate all-cash transactions for approximately $43 million, excluding closing costs and adjustments. The properties include Elston Plaza, a grocery-anchored center in Chicago, which the joint venture bought for $18.9 million, and Brownstones Shopping Center, a grocery-anchored shopping center in Brookfield, Wis., which was bought for $24.1 million.
Elston Plaza contains 88,213 sq. ft. of space. It is located in an area with 564,000 people living within a three-mile radius and average household incomes of $70,300 per year. At the moment, Elston Plaza is 95 percent occupied. Jewel-Osco anchors the property, with other tenants including Chipotle Mexican Grill, O’Reilly Auto Parts and Chase Bank.
Brownstones Shopping Center underwent a redevelopment in 2010. It contains 137,800 sq. ft. of space and is located in an area with 41,000 people living within a three-mile radius and average household incomes of $102,501 per year. The center is 93.7 percent occupied. Metro Market anchors the property. Other tenants include T.G.I. Friday’s, Verizon Wireless, Casual Male XL and Pearle Vision.
“These assets are all firmly in line with the goals of the joint venture, which seeks to acquire grocery-anchored and community retail centers in strong locations within targeted Midwest markets,” said Scott Carr, president of property management with Inland Real Estate Corp., in a statement. “Including Elston Plaza and Brownstones Shopping Center, the joint venture has purchased seven assets with a total acquisition value of $141.3 million, bringing use more than halfway to the targeted goal of $270 million in new acquisitions for the venture.”
United Properties sold the Marketplace at Austin Bluffs, a 226,626-sq.-ft. grocery-anchored shopping center in Colorado Springs, Colo., to AmCap Austin Bluffs LLC for $32.81 million. The price represents $145 per sq. ft.
The center was redeveloped in 2007. King Soopers, the No. 1 grocery chain in Colorado, anchors the asset. Other tenants include 24-Hour Fitness, Hancock Fabrics, Ace Hardware and Office Depot.
Jon Hendrickson, a senior associate with Marcus & Millichap Real Estate Investment Services, represented both parties in the transaction.
In a separate announcement, Marcus & Millichap Real Estate Investment Services negotiated the sale of a 12,863-sq.-ft. net leased Walgreens in Plantation, Fla. for $6.2 million. The price works out to $482 per sq. ft. The transaction was closed at a cap rate of 6.45 percent. The property comes with a 25-year Walgreens lease that has 21 years remaining, with 10 five-year options. Ronnie Issenberg and Scott Sandelin, of Marcus & Millichap, represented the seller in the transaction.
Lucent Capital arranged a $23.5 million construction loan on behalf of Highway Partners LLC for The Barlow, a 216,000-sq.-ft. adaptive reuse project in Sebastopol, Calif. The loan features a two-year term with an extension option.
When completed, the Barlow will contain a renovated 121,000-sq.-ft. industrial park and a farmer’s cooperative, plus 95,000 sq. ft. of ground-up development. The project is designed to allow local industrial tenants, including wine and cheese makers, glass blowers and specialty product manufacturers, to produce goods onsite and sell them directly to consumers. It is 78 percent leased and scheduled for completion in 2012.
HFF arranged a $6.1 million loan on behalf of Capstone Advisors for Olde Towne Shopping Center, a 91,494-sq.-ft. retail property in Richmond, Va. A national life company provided the financing.
Olde Towne Shopping Center is 99 percent leased. Stein Mart and Buffalo Wild Wings anchor the property.
Tim Wright and Zack Holderman, of HFF, negotiated this transaction.
In a separate announcement, HFF negotiated the sale of a portion of Veranda Park, a mixed-use development in Orlando, Fla., to Geosam Capital Inc. The sale included 118 unsold residential condominiums, 66,000 sq. ft. of largely vacant retail space and an 11.7-acre site zoned for multifamily, retail, office or hotel development. Manny de Zarrage, George Vail, Jaret Turkell and Scott Wadler, of HFF, negotiated this transaction.
WP Realty sold the Festival at Exton, a 152,000-sq.-ft. shopping center in Exton, Pa. The center was completed in 1991. WP Realty purchased the property in 2005, when it had an occupancy rate of 50 percent, and then redeveloped the center, bringing in Marshalls / Home Goods as an anchor.
Hanley Investment Group Real Estate Advisors negotiated the sale of a 13,678-sq.-ft. single-tenant Walgreens in Lake Elsinore, Calif. for $8.086 million. The transaction closed at a cap rate of 6.48 percent. The property was completed in 2011 and is leased to Walgreens for a 75-year term. William B. Asher and Jeremy S. McChesney, of Hanley Investment Group, represented both parties in the transaction.
The Boulder Group negotiated the sale of a 13,905-sq.-ft. single tenant net leased Walgreens in Cedar Rapids, Iowa, to a private investor for $4.18 million. The building was completed in 1999 and has eight years remaining on its lease. Randy Blankstein and Jimmy Goodman represented the seller in the transaction. The Boulder Group also negotiated the sale of a ground-leased Walgreens in Chicago, Ill. for $1.97 million. The property is leased to Walgreens for an 18-year term. Randy Blankstein and Jimmy Goodman, of The Boulder Group, represented the seller in the transaction.
Lindsay Commercial Real Estate negotiated the sale of a building ground leased to 7-11 in Chesapeake, Va. for $1.75 million in a 1031 exchange transaction. The retailer has 15 years remaining on its lease. Joseph Pietrafesa, of Lindsay Commercial, negotiated this transaction.
Burger King Corp. sold a 1.12-acre site housing a former Burger King restaurant in Saginaw, Mich. to O’Reilly Automotive Stores Inc. Adam Goodman and Tony Schmitt, of Mid-America Real Estate-Michigan Inc., represented the seller in the transaction. Miles Gatland, of Miles Gatland & Associates, represented the buyer.