According to Smigiel, who worked with Voorhees on the sale, 34 bidders in total stepped up to claim the 55% vacant property. Sean Asmus, vice president of development at Reddy Development, tells DAI that the company plans to re-tenant and hold the property. And, says Smigiel, Reddy already has a lot of leasing activity going on, even on the 100,000-square-foot box, which, "might have to be broken up, but so far, there's a lot of interest from a combination of Hispanic oriented stores and some traditional retailers of soft goods, which is great."

One of the factors that attracted Reddy was the combination of the right stores in the right location. Smigiel cites the high concentration of Hispanic consumers in a three-mile radius around the center. Out of more than 170,000 people, nearly 41% are Hispanic. Within a one-mile radius, Smigiel says, the percentage rises to 60%. Pro's Ranch "was the right store in the right location and it does extremely well in sales," he adds. According to Voorhees, "This deal shows the huge amount of investor demand for distressed properties. We're seeing intense bidding activity on almost every REO property we take to market." Mesa Ranch Plaza traded at a fairly low cap rate and $90 per square foot. "Depending on how you look at it, it was either a great price or very expensive because the current cash flow makes the cap rate low, yet on a price per square foot basis, it sold for about half of replacement cost."

Smigiel too has seen high numbers of interested buyers for REO properties but points out that this one was a little higher than others. For example, his Phoenix investment team recently sold a retail center in North Scottsdale, AZ that was anchored by high end grocer AJ's, that was 66% leased. That center, he said, had 22 offers. "Good quality centers that have a real good story behind them are getting a lot of bids," he says. Voorhees and Smigiel also worked with Todd Goodman, Pat Toomey, Megan Read and John Read, along with CBRE's local Phoenix investment team of Bob Young, Steve Brabant and Rick Abraham, as well as retail specialists Kevin Schuck and John Rehling. Bruce Francis and Dana Summers of CBRE Capital Markets in Phoenix represented Reddy Development. A local expert recently told sister publication GlobeSt.com that the lenders held a note of $26 million to $28 million on Mesa Ranch Plaza, which means that they recovered more with this sale than the industry average for REO retail properties. Industry research indicates that lenders are recovering 60 to 65 cents on the dollar, on average, which Smigiel says is a good approximation. Mesa Ranch Plaza is located at 1036-1118 E. Southern Ave. In addition to Pro's Ranch Market, the center is leased to Anna's Linens, T-Mobile and a host of local and regional small tenants. "There was a lot of risk for the buyer coming into the deal because of the vacancy, but he felt confident he could be successful with the center," Voorhees says.

GlobeSt.com News Hub is your link to relevant real estate and business stories from other local, regional and national publications.