PHOENIX-Cole Real Estate Investments has paid $45 million for three retail centers located in secondary and tertiary markets in three states. The multi-tenant properties are: Red Oak Village in San Marcos, TX; Pinehurst Square West in Bismarck, ND; and Falcon Valley in Lenexa, KS.
“We buy in primary markets, as well as secondary and tertiary markets,” says Scott Holmes, Cole’s vice president of acquisitions and team leader for multi-tenant retail acquisitions. “Our main focus is not on the market, but the trade area, the long-term nature of the tenants and the credit of the tenants.”
Holmes tells GlobeSt.com that yields tend to be lower in primary markets, especially coastal markets such as Los Angeles and Washington D.C. “Secondary and tertiary markets can provide yields premiums, anywhere from 50 to 150 basis points higher than primary markets,” he says.
Cole bought all three properties in off-market transactions. “We are finding a lot of deals through brokers who are calling us first before going through a full-blown marketing process,” Holmes explains.
Holmes points out that Red Oak Village, Pinehurst Square West and Falcon Valley are relatively new properties built within the past five years. All of them are dominant centers leased to category leading tenants in strong trade areas, he adds.
Red Oak Village and Pinehurst Square West are both power centers, while Falcon Valley is a grocery-anchored center.
Red Oak Village is a 176,000-square-foot, 96% leased power center anchored by Best Buy, Marshall’s, Bed Bath & Beyond, PetSmart, Ross and ULTA. Cole acquired the property for about $22 million.
Pinehurst Square West is a 69,000-square-foot power center that is shadow anchored by Lowe’s and Kohl’s. Cole paid $10.25 million for the property, which is 100% leased to tenants including: Best Buy, PetSmart, Dollar Tree, Men’s Wearhouse and Starbucks.
Falcon Valley is a 77,000-square-foot, 100% leased retail center anchored by Price Chopper, the market’s dominant grocery retailer. Cole paid $12.75 million for the property.
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