In these heady investment times, buyers are flocking from sellers' markets-particularly grocery-anchored neighborhood centers-to more sanely priced power centers. The recent $86 million sale by North American Properties of Atlanta metro area power centers MarketPlace at Mill Creek and Stonecrest MarketPlace to Inland Retail Real Estate Trust is a case in point.
Although the sale represents an aggressive cap rate just south of 9 percent, North American Partner Mark Toro says the hotly contested transaction represents very limited opportunity at affordable prices in neighborhood shopping centers. Power centers rife with credit tenants are now the apple of the investor's eye.
Particularly these two. The Marketplace at Mill Creek, opened in 200, sits opposite the Mall of Georgia. The 391,000-square-foot power center is 96 percent leased. The 263,000-square-foot Stonecrest MarketPlace is located adjacent to The Mall at Stonecrest. Both opened more recently, and the power center is 98 percent leased. Both properties include CostPlus World Market, DSW Shoe Warehouse, Linens N Things and Ross Dress for Less. The power centers' sales per square foot were not available, but each rents at market-ranging between $9 per square foot and $15 per square foot. This is the fifth purchase of a North American asset by Inland, which has been on shopping spree. The company purchased 107 shopping centers in the last 12 months, and Real Capital Analytics ranked Inland the highest-volume purchaser in 2002. But don't expect the company to monopolize Atlanta's power centers.
Says Inland Chairman Joe Cosenza, "I'm not interested in buying problems right now, and I'm not interested in buying turnaround or value-added properties. I don't have the time for that." It takes too much manpower in order to correct the wrongs that were done in some centers, Cosenza adds. North American originally purchased the Stonecrest property from Forest City-Cadillac Fairview, its joint-venture developer, and developed the Mill Creek property itself.