The 140,942-sf first phase, anchored by a Fry's Food and Drug Stores, was not part of the transaction. Nonetheless, the Fry's was a powerful incentive for buyers. "Fry's is the prominent grocery store in Phoenix and obviously a huge draw," Gary Goodman, Passco's senior vice president of acquisitions, says about the property at 5240 W. Baseline Rd. He tells GlobeSt.com that Fry's has a long-term lease with Houston-based Weingarten, which is retaining ownership of the 100%-leased first phase.
Passco's new buy is 97% leased, with the roster including Dollar Tree Stores Inc., Pizza Hut Inc. and Applebee's International Inc. In addition, there is an adjacent Home Depot Inc. There 1,717 sf is still vacant, but Goodman says negotiations are underway with a tenant--and the space should be leased shortly.
"There's no turnover in the rent roll until the fourth year of ownership," Goodman says. "This fits our program very well."
Goodman adds the shopping center brings added benefits because it's close to a growing single-family area, where there are high barriers to entry. He says the area is more residential than commercial development so Laveen Village Marketplace won't have much competition in the near future.
While the space offers upside as leases roll in four years, Goodman acknowledges that wasn't the purpose of the buy. "What was more important for us is that this is a stable asset, with a stable cash flow for the investor," he says.
Laveen Village Marketplace is Passco's second retail buy this year in the metro. The company also owns the 124,820-sf Chandler Heights Marketplace at 4960 S. Gilbert Rd. In addition, Passco owns multifamily assets in the area. Passco has an in-house team to lease and manage its properties.
Ramez Barsoum, managing director of REZA Investment Group Inc. in Irvine, CA, represented Passco and Weingarten in the transaction. Wachovia Corp. provided acquisition financing.
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