“The acquisition of Southgate Plaza in Sacramento was a perfect opportunity for us to add to our portfolio of shopping centers by acquiring an asset that fits well into our investment philosophy,” Sandy Sigal, president and CEO of NewMark Merrill Companies, tells GlobeSt.com. “The center is well located on the two major streets–Franklin and Florin, and adjacent to the 99 Freeway, a major arterial for Northern California. The population and demographics are solid with an untapped demand for retail, and while we were managing the center, we were able to attract three daily needs retailers–99 Ranch Market, Wal-Mart Grocery and 99c Only Stores–as well as three soft goods retailers–Ross, Sketchers and Avenue–all performing very well. Finally, the center has upside through the ability to lease additional space including an almost 80,000-square-foot major tenant vacancy and a corner pad. With our experience of managing the center for over five years from the prior owner, we are strong believers that Southgate will be a great addition to our portfolio.”

CBRE's Sacramento-based executive vice president Chris Campbell and his partners, first vice presidents Scott Carruth and Jason Read, were the leasing agents on Southgate Plaza at the time of sale and generated tremendous leasing momentum during their tenure. CBRE executive vice president Philip Voorhees and Slusher were part of the CBRE national retail investment group–West team who completed the sale. The others on the CBRE retail investment team were Todd Goodman, Megan Wood, Matt Burson, Kirk Brummer, Preston Fetrow and John Read. They represented Wrightwood Financial on behalf of one of its managed vehicles.

“We have had a longstanding relationship with Newmark Merrill Companies, having previously provided capital to them, and worked closely with them as the project's asset manager through the downturn,” said Bruce Cohen, CEO of Wrightwood Financial. “After a comprehensive market effort, ably led by the CBRE team, Newmark Merrill emerged as the logical buyer.”

Voorhees provided some additional insight into transaction, along with the Sacramento investment market and how it is doing since the downturn.

“Investor demand for retail assets with strong fundamentals and an opportunity to improve NOI continue to attract strong interest from private and institutional investors alike, and an asset like Southgate, which has three daily needs generators as well as best-of-class soft-goods retailers, are especially in demand,” said Voorhees.

GlobeSt.com: We are hearing that Sacramento is bouncing back. Is the sale of Southgate Plaza an indication of that?

Philip Voorhees: Perhaps so. We feel the quality of life and average household income vs. cost of housing per square foot equation in Sacramento is superb, arguably one of the best stories in the West. Most institutional investors still consider Sacramento a secondary investment market, though, it's long been a top market for West Coast investors seeking superior yields to those in coastal counties, but in a large, easily accessible metropolitan area with strong fundamentals.

GlobeSt.com: What can retail acquisitions/dispositions tell us about the improvement of the market vs. some other property types?

Voorhees: In general, institutional investors are keenly focused on owning the best performing grocery-anchored shopping centers in primary markets. Southgate Plaza effectively has three grocery anchors with Walmart, 99 Ranch Market and 99 Cents Only store. This strong grocery component combined with an immediate opportunity to add value through leasing made Southgate appealing to both institutional and private investors alike. Since the election, the US 10-Year Treasury Yield has increased about 55 basis points. Lenders have not compressed spreads to offset this gain, thus the cost of debt financing increases accordingly. This could create an interim period study and analysis as opposed to transacting as the country (and financial markets) settle into a Trump presidency. That said, retail fundamentals in the West remain strong. In many markets, particularly in secondary and tertiary markets, rents and transaction prices per square foot are not back to the peak levels of the last cycle.

SACRAMENTO—Southgate Plaza, a 339,369-square-foot grocery-anchored shopping center, is located at Florin and Franklin. NewMark Merrill Companies LLC, a Los Angeles-based retail investment and management company, was previously hired by Chicago-based Wrightwood Financial to oversee the re-tenanting and repositioning of Southgate after the asset was taken over by Wrightwood over five years ago.

This resulted in the partial lease-up of the center which now has three high-performing grocers, Walmart Neighborhood Market, 99 Ranch Market and 99 Cents Only. In addition, there are numerous complementary co-tenants in the mix, including Ross Dress for Less, Skechers, Baskin Robbins, Sally Beauty, Payless Shoe Source, Chase Bank, Farmer & Merchants Bank, Taco Bell and H&R Block.

“The property had tremendous leasing momentum despite the existing 27% vacancy,” according to Jimmy Slusher with CBRE. “In the past 15 months, 53,000 square feet or 21% of the property has been leased up.”

Due to the nature of the anchor tenants and those providing daily necessity goods, along with an upside opportunity through the lease-up of vacant space, the asset recently sold at $42.1 million. The buyer was a subsidiary of NewMark Merrill Companies LLC. This was NewMark Merrill's third acquisition in the Sacramento area.

“The acquisition of Southgate Plaza in Sacramento was a perfect opportunity for us to add to our portfolio of shopping centers by acquiring an asset that fits well into our investment philosophy,” Sandy Sigal, president and CEO of NewMark Merrill Companies, tells GlobeSt.com. “The center is well located on the two major streets–Franklin and Florin, and adjacent to the 99 Freeway, a major arterial for Northern California. The population and demographics are solid with an untapped demand for retail, and while we were managing the center, we were able to attract three daily needs retailers–99 Ranch Market, Wal-Mart Grocery and 99c Only Stores–as well as three soft goods retailers–Ross, Sketchers and Avenue–all performing very well. Finally, the center has upside through the ability to lease additional space including an almost 80,000-square-foot major tenant vacancy and a corner pad. With our experience of managing the center for over five years from the prior owner, we are strong believers that Southgate will be a great addition to our portfolio.”

CBRE's Sacramento-based executive vice president Chris Campbell and his partners, first vice presidents Scott Carruth and Jason Read, were the leasing agents on Southgate Plaza at the time of sale and generated tremendous leasing momentum during their tenure. CBRE executive vice president Philip Voorhees and Slusher were part of the CBRE national retail investment group–West team who completed the sale. The others on the CBRE retail investment team were Todd Goodman, Megan Wood, Matt Burson, Kirk Brummer, Preston Fetrow and John Read. They represented Wrightwood Financial on behalf of one of its managed vehicles.

“We have had a longstanding relationship with Newmark Merrill Companies, having previously provided capital to them, and worked closely with them as the project's asset manager through the downturn,” said Bruce Cohen, CEO of Wrightwood Financial. “After a comprehensive market effort, ably led by the CBRE team, Newmark Merrill emerged as the logical buyer.”

Voorhees provided some additional insight into transaction, along with the Sacramento investment market and how it is doing since the downturn.

“Investor demand for retail assets with strong fundamentals and an opportunity to improve NOI continue to attract strong interest from private and institutional investors alike, and an asset like Southgate, which has three daily needs generators as well as best-of-class soft-goods retailers, are especially in demand,” said Voorhees.

GlobeSt.com: We are hearing that Sacramento is bouncing back. Is the sale of Southgate Plaza an indication of that?

Philip Voorhees: Perhaps so. We feel the quality of life and average household income vs. cost of housing per square foot equation in Sacramento is superb, arguably one of the best stories in the West. Most institutional investors still consider Sacramento a secondary investment market, though, it's long been a top market for West Coast investors seeking superior yields to those in coastal counties, but in a large, easily accessible metropolitan area with strong fundamentals.

GlobeSt.com: What can retail acquisitions/dispositions tell us about the improvement of the market vs. some other property types?

Voorhees: In general, institutional investors are keenly focused on owning the best performing grocery-anchored shopping centers in primary markets. Southgate Plaza effectively has three grocery anchors with Walmart, 99 Ranch Market and 99 Cents Only store. This strong grocery component combined with an immediate opportunity to add value through leasing made Southgate appealing to both institutional and private investors alike. Since the election, the US 10-Year Treasury Yield has increased about 55 basis points. Lenders have not compressed spreads to offset this gain, thus the cost of debt financing increases accordingly. This could create an interim period study and analysis as opposed to transacting as the country (and financial markets) settle into a Trump presidency. That said, retail fundamentals in the West remain strong. In many markets, particularly in secondary and tertiary markets, rents and transaction prices per square foot are not back to the peak levels of the last cycle.