The total project cost, including the land, is estimated at $105 million. Tristate acquired the rights to develop the center from King of Prussia-based Sapphire Development Cos., which assembled the land, developed the plan and obtained approvals.
Under the Cedar/Tristate partnership, the Port Washington, NY-based shopping center REIT will provide up to $17.5 million as invested capital with a preferred return. Through its affiliates, including Fameco, Tristate will obtain some development fees and be responsible for construction, leasing and property management.
"This is an unusual agreement for us," Tom Richey, Cedar's VP of development and construction, tells GlobeSt.com, since Cedar is a developer and generally handles leasing and management of its properties. "Sapphire has been working on this for a number of years," he says. After land-planning and obtaining rezoning and other approvals, "[Sapphire] didn't want to build it," Richey says.
Cedar will have certain oversight rights and responsibilities for the project. It will have a 60% interest in the venture and an option, but no obligation, to acquire Tristate's interest three years after stabilization at a "determinable agreed price," an agreement that is not unusual, according to Richey.
Upland Center is expected to be substantially preleased to several national big box tenants prior to breaking ground. Richey says some may be constructed under ground leases and some are proposed build-to-suits. He confirms GlobeSt.com's assumption that there will be a grocery anchor, a feature of nearly all Cedar properties. Among clients that Fameco represents are Wal-Mart, Lowe's, Home Depot, Borders, Wegman's, LA Fitness, Best Buy, Staples and Petco.
This is Cedar's first partnership with Tristate. "The signing of this agreement marks another milestone in our long-standing relationship with the Fameco group and its affiliates," says Leo Ullman, Cedar's CEO, in a statement.
Brandon Famous, Fameco's founder and CEO, says, both companies' "established position in key markets of Pennsylvania will be further enhanced with this project. We hope this will be but the first of many successful development projects with Cedar." Fameco also manages about 8.2 million sf of retail shopping center space.
Upland Square will take Cedar's stake in Pennsylvania centers to more than six million sf, the lion's share of its 104-property, 10.6-million-sf portfolio. "This project should add meaningfully to our company's substantial pipeline of development properties coming on line during the next few years," Ullman says. More Pennsylvania properties are in that pipeline. Upland Square, located approximately 40 miles northwest of Philadelphia, is scheduled to open by mid 2009.
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