The Roseland, NJ-based shopping center REIT acquired the property from entities affiliated with privately held Estein & Associates USA Ltd. for $104 million. The purchase price included the assumption of a $24.4 million 8.12% mortgage due 2012 and, for the cash portion, a $100-million one-year bridge loan provided by Wachovia Bank, N.A. at an interest rate of LIBOR plus 80 basis points. The capitalization rate on the investment is estimated at 10%.
The center opened in 1993 with 255,000 sf and was expanded to its current size in 1996. The center is 99% leased to approximately 130 tenants and posted 2002 sales averaging $390 per sf and occupancy costs averaging less than 7% of sales, according to Chelsea.
The property gives Chelsea outlet centers on two sides of The Strip. In partnership with Simon Property Group Inc., Chelsea recently completed Las Vegas Premium Outlets, a new 435,000-sf center located a couple of miles from the north end of The Strip. A grand opening is scheduled for next week.
In conjunction with the acquisition of the Las Vegas center, Chelsea also purchased Belz Factory Outlet World - Lakeland, located near Memphis, TN, for $3.5 million. Chelsea officials say the property will be marketed for resale shortly.
Memphis-based Belz Enterprises, the developer of both the acquired outlet centers, maintains ownership of 100 acres adjacent the Lakeland property slated for a town center and, adjacent the Vegas property, a 51,874-sf outlet annex and 12 acres of out parcels fronting Las Vegas Boulevard. Belz President Andrew Groveman tells GlobeSt.com the out parcels are being marketed for sale.
"We've witnessed enormous growth in Las Vegas over the last five years," says Groveman. "The city's retail sector has kept pace with this rapid development and is a highly saturated market right now. It's a strategic time for us to move onto other development initiatives. We believe it has reached its full potential."
The sale to Chelsea represents about 15% of the Belz portfolio. Belz and Estein retain ownership of elz Factory Outlet Worlds in Orlando, FL; St. Augustine, FL; Pigeon Forge, TN, San Juan, Puerto Rico; Belz Designer Outlet Centre in Orlando, and; 100 Oaks Mall in Nashville, TN.
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