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Puget Sound Investment Review – September 2011 September 19, 2011

Posted by Erik Swanson in Articles, Puget Sound Investment Review, Research/Data, Retail News, Sale, Uncategorized.
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Anchored Retail Draws Buyers August 9, 2011

Posted by Erik Swanson in Articles, Retail News, Retail Sales Comps, Sale, Uncategorized.
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The appetite for grocery anchored retail investments remains strong. Two area centers traded hands over the last couple of weeks. 

Gerrity Holdings purchased the QFC anchored North Lynnwood Shopping center for $10.2 million which is roughly a 7.25% cap rate. The property was originally listed for sale last year at $10,600,000  a 7% cap rate. 

Another recent sale was the 120,860 square foot Canyon Park Shopping Center. The Albertson, Rite Aid anchored center sold for $18,400,000 which equates to $152 per square foot in an all cash transaction. The purchase included the inline space and the ground leases for the Albertson’s and Shell. Retail Opportunity Investment Corporation beat out numerous buyers with a 7.06 Cap rate, all-cash offer with a quick 3 week close.  

It’s been an interesting few weeks with all that’s gone on in the world. The political fight over raising the debt ceiling and the S&P down grade have certainly been a distraction and investors seem uncertain as to the lasting effects on CRE (check out this nreionline.com article). It seems clear that for the foreseeable future well located properties with strong anchors will continue to draw serious buyer interest.

Loja Real Estate Acquires Lakeland Town Center June 24, 2011

Posted by Erik Swanson in Articles, Development, Research/Data, Retail News, Retail Sales Comps, Sale.
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Last week Loja Real Estate of Walnut Creek, CA purchased the Lakeland Town Center from Investco of Sumner. The transaction closed on June 17, 2011 with a sale price of $39.4 million – approximately $300 per square foot. The cap rate was not disclosed but sources tell us that it was “in the low 6 cap” range.

Source: Tarragon

The Lakeland Town Center is a 132,000 square foot grocery-anchored shopping center sitting on 12.4 acres. The center was built by Investco affiliate Tarragon in 2002. The center is anchored by a 67,000 square foot TOP Food & Drug and includes other quality tenants such as Blockbuster, Starbucks, The Rock Brick Oven Pizza and Brewery and McDonald’s. 

Loja Real Estate, LLC, is a wholly owned subsidiary of The Loja Group LLC,  a women-owned real estate investment management firm with $135 million in assets under management. This is their first purchase in Washington and their third outside California.

More evidence of the appetite for strong grocery anchored centers and proof that sellers in our region will continue to reap the benefits of a supply constrained market.

Cap Rates…Rise or Fall? June 14, 2011

Posted by Erik Swanson in Articles, Blogs, Research/Data, Retail News, Sale, Uncategorized.
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Today, I was speaking with a developer who’s contemplating putting a retail center on the market. This particular asset is stabilized and he’s enjoying increased cash flow after his interest rate has adjusted downward on a variable rate loan.  He believes his tenants will accept their scheduled annual rent increases and expects the operating income will rise accordingly. Life is good, why sell? 

Investors seeking stabilized assets with has contributed to several quarters of cap rate decline. Couple that with a looming inflationary period and the likelihood of rising interest rate environment seem to beg the question, “is it time to sell?”  There are a few dynamics to consider here; the increasing availability of inexpensive debt, the lack of suitable alternative investments, and the sentiment that retailers are healthier. Investors have seen that vacancy rates have leveled off and rent growth, albeit modest, may soon begin. This is putting downward pressure on cap rates as buyers price in these future NOI gains.

Every deal is unique unto itself and obviously needs to be analyzed beyond how the value is affected by today’s cap rates. It seems clear however, that we’ll see rising cap rates in the not too distant future. Click the link to check out an interesting article in National Real Estate Investor  .

Just Sold: Eastway Center, Renton, WA May 27, 2011

Posted by Sean Tufts in Retail News, Retail Sales Comps, Sale.
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Just Sold! May 6, 2011

Posted by Erik Swanson in Listings, Research/Data, Retail Sales Comps, Sale.
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Bellevue Galleria, Costar/Loopnet & Development April 29, 2011

Posted by Sean Tufts in Articles, Investment Tools, Retail News, Retail Sales Comps, Sale.
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The Bellevue Galleria was purchased by Thor Equities of New York for $87.5MM this week. Based on a marketing package we had seen last year that equates to a 7.7% cap rate. The property is 99% leased and sold at $429/sf. This is an unusual story in the current environment and shows the strength of the Bellevue market. The property was purchased in July of 2007 for $53.4MM. There are very few examples of relatively stable properties that were purchased in 2007 that have turned around and sold for a profit. The seller did spend significant dollars on new tenants but the return on this deal is still very healthy!

In other news, Costar has signed a deal to purchase Loopnet for $860 million. We use both sources on a daily basis in our business and are very interested to see how the information and resources come together. Hopefully, the blend of the two will allow a better flow of information than what is currently available. Below is a quote from an article that sums up their differences pretty well:

CoStar relies on the work of 900 researchers to compile data on high-value properties in urban areas, and LoopNet allows users to post their own property information and has listings that span small towns and farms throughout the country. Florance said LoopNet’s listings would immediately allow CoStar to add more than 500,000 listings….“We’re (Costar) really about data, and they’re (LoopNet) more about sales,” Florance said. “We’re very urban, they’re rural and suburban and middle America.”

Lastly, Lorig is finally breaking ground on the big hole in Green Lake. PCC Market stepped up to anchor the project and give it new life. The old Vitamilk site should finally be rebuilt after sitting vacant demolished for over 6 years. The full article is here.

Just Sold: Normandy Park Towne Center April 8, 2011

Posted by Sean Tufts in Retail Sales Comps, Sale.
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Lenders increase “off-market” sales April 6, 2011

Posted by Erik Swanson in Articles, Investment Tools, Research/Data, Retail News, Sale.
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Many of us in the commercial real estate business have been frustrated by the extend and pretend policies that have stalled a meaningful recovery in the broader market. Lately however, foreclosures and note sales have increased significantly and lenders are showing an eagerness to clear their books of these toxic assets. 

…the estimated 7,000 CMBS loans that were in special servicing as of Dec. 31, 2010, only 354 were officially reported as having been restructured or modified.

That is a far cry from a year earlier when lenders were extending more than 80% of troubled loans through various forbearance and modification programs. Lenders are foreclosing on about 71% of these loans today and modifying only about 29%. 

Locally, our own experience supports this data. Last month, we closed 3 separate distressed sales.  In two cases the lender sold the note, choosing to let a new investor workout a deal with the borrower. The other was an REO sale involving a severely distressed shopping center in which the lender originally wanted to lease-up  the asset before selling.  After receiving multiple “off market” offers to purchase in a relative short amount of time, and considering the time and cost to stabilize, the lender chose to sell and let an investor take on the project. 

-check out NREI article here.

New Retail Center Sales March 29, 2011

Posted by Sean Tufts in Articles, Retail Sales Comps, Sale.
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Major news as a couple of large retail centers trade hands in the Puget Sound over the last two weeks. Wesbild has closed on a sale of Burien Town Plaza to Merlone Geier Partners of California for $14.4MM. At the same time, Wesbild is selling Westwood Village in West Seattle to Bentall Kennedy for $78.1MM.

The Westwood sale represents the largest single property retail center sale in the Puget Sound since the nearly $100MM sale of Factoria Mall in 2004. Burien Town Plaza is Merlone’s third purchase in the last four months after acquiring Marysville Town Center and Sunset Square.

Westwood Village – Site Plan

Burien Town Plaza – Site Plan

Another center that has just closed is Promenade 23 in Seattle’s central district. Publicly traded REIT, Weingarten Realty, purchased the 97,000 sf center for $18.4MM last week from a group of local private owners and a non-profit. At $190/sf the center has a future development potential that could include mixed-use multi-family over retail.

The DJC subscription article is here.