(For more retail coverage, click GlobeSt.com/RETAIL.)
CLEVELAND-An unidentified Los Angeles-based investor has acquired Church Square for slightly more than $18 million, or about $164 per sf, in a 1031 exchange. The seller, Beachwood-based Reisenfeld & Co., developed the 109,547-sf shopping center in 1993.
Church Square is located on 10 acres at 7901-8101 Euclid Ave. The anchor is Church Square Supermarket, owned by Landmark Foods Inc., and the center is 100% leased. Among the other tenants are CVS, Fashion Bug and Radio Shack.
Joseph C. French Jr. and Neil B. Golub of the White Plains, NY office of Irvine, CA-based Sperry Van Ness represented the buyer, and Reisenfeld spoke for itself. French tells GlobeSt.com, "the buyer owned apartments in Los Angeles at a 5% cap rate, and identified this property at an eight cap. So he entered into a 1031 exchange to dispose of his LA holdings and obtain this property. He's setting up a management company in Cleveland to operate the center."
The transaction was complicated because the city had provided a low-interest, 30-year loan for development of this inner city property. In order to assume the loan, the buyer had to gain the approval of the City Council and the mayor. During the negotiations, Mayor Frank Johnson was elected to replace Jane Campbell, which required the buyer to again present his plans in person to the new mayor. Furthermore, he had to defease an additional primary loan on the center in order to acquire new financing for the asset.
Inner-city Cleveland retail rental rates, according to French, are in the low- to mid-teens per sf for small stores. On leases for bigger units, the rates begin in the high single digits per sf and reach to the low-teens per sf.
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