PHOENIX-Nexus Companies has transformed Bell Towne Centre and Bell Towne Plaza from an outdated center with increasing vacancy to a thriving retail destination. The final pieces of the five-year metamorphosis are new leases with LA Fitness and Toys “R” Us and a complex refinancing.
“Bell Towne is proof that you can succeed in troubled times if you work together with your tenants, the cities and the local brokerage communities,” says Cory Alder, president of Nexus Companies, which has owned Bell Towne Centre and Bell Towne Plaza for nearly 20 years. The project has maintained occupancy of more than 91% during the downturn.
Like many companies, Nexus had to make the decision whether it would reinvest in Target-anchored property or continue to let it decline and lose value. Constructed in phases from the late 1980s, it was well-located in central Phoenix, but in 2003, the firm noticed it was becoming a class B center.
The property had lost several tenants to bankruptcy including Food 4 Less and Clothestime, and in 2004, Harkins Theater moved out. “At this point the center, with its outdated look, vacant movie theater and increasing vacancy, was in danger of becoming a class C center without some serious investment,” says Brandon Ghiossi, a development associate with Nexus Companies.
Alder tells GlobeSt.com that Nexus decided go “full-bore” with a redevelopment plan. The firm first approached Target about expanding its garden center or expanding to include some of the area where the movie theater had been. After reviewing the site, Target said it could open a Super Target store at the site. However, the retailer was only willing to do so if the new store could face Bell Road instead of the 7th Street orientation.
For Nexus to construct a new Super Target, the firm had to get approval from the loan servicer – it had a CMBS loan on the property – and work with the city of Phoenix to obtain new entitlements. The negotiation with Target also involved the restructuring of a ground lease and approval to build 20,000 square feet on three retail pads near Bell Road, which was restricted under the old Target deal, Alder explains.
Alder says the existing conduit loan prevented Nexus from placing additional debt on the property to construct the new Target. The firm worked with Bank of America to obtain a loan of nearly $7 million, using the partnership as collateral.
After more than a year of planning, Nexus began construction of the new 177,000-square-foot Super Target. Additionally, it also commenced a $5 million exterior facelift for the property including new fa
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