HARRISBURG, PA-Pennsylvania Real Estate Investment has completed the previously announced sale of Paxton Towne Centre here for $76.8 million. PREIT reported a gain on the sale of $33.6 million.
There is high demand for power centers right now, said Joseph F. Coradino, CEO of PREIT. “Market fundamentals have led to increased demand for high quality power centers, making this an ideal time to harvest the value created through development, management and leasing of this property,” he said.
PREIT developed Paxton Towne Centre in 2001. The property's estimated value was $57.9 million as of Sept. 30, 2012.
The 717,000-square-foot shopping center is anchored by Target, Costco, Kohl's, and Weis Markets. Other retailer tenants include H.H. Gregg, Michael's, Books-A-Million, Babies“R”Us and Bed, Bath and Beyond.
PREIT said it paid off a $50 million mortgage on the property, leaving it with net proceeds of $24.9 million, after closing costs and before post-closing obligations. The company plans to use the rest of the proceeds to reduce its debt, and focus tightly on its core mall portfolio, said Coradino.
PREIT also has received a non-refundable deposit to sell another non-core power center, Christiana Center in Newark, Delaware, to an affiliate of the Paxton Towne Centre buyer. The contract sale price is $75 million, and the transaction is expected to close by the end of the first quarter, according to PREIT. That property currently has a mortgage loan with an outstanding balance of $49.9 million.
The blended capitalization rate on the sale of Paxton Towne Centre and the scheduled sale of Christiana Center would be approximately 6.7%.
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