CLEVELAND—Devonshire REIT, Inc., an Ohio-based real estate investment trust, has just acquired Pavilion Shopping Center in suburban Beachwood for $35 million. A Giant Eagle grocery store anchors the 249,873-square-foot center and Big Lots, Marshalls, Michael’s and Stein Mart act as sub-anchors. The purchase comes on the heels of Devonshire’s $31 million purchase of five other centers in the Toledo area.
In the past few months, the retail sector started buzzing with some excitement as it became apparent that the lingering effects of the recession were wearing off and consumer demand was back. And even though that has helped grocery-anchored centers become quite popular with investors due to their ability to always draw in customers, Devonshire officials say it’s been their specialty.
“While the merits of grocery-anchored centers, and attractive sub-market returns, just now seem to be making the industry news, the acquisition and management of these types of properties are built in to Devonshire’s DNA,” says Chris Campbell, chief executive officer of Devonshire REIT. “It’s what we’ve done from the beginning, so we feel we are significantly ahead of the curve which gives us a competitive edge on getting deals like this one, which adds over $1 million to our cash flow after debt service, done.”
Huntington Bank provided financing for the transaction.
Other national tenants at Pavilion include: Petco, Lane Bryant, Quiznos, Bruegger’s Bagels, Sally Beauty Supply, GNC, Verizon Wireless, Ruby Tuesday and Huntington Bank. Tenants occupy 97% of the center with the one remaining vacant space currently under negotiation.
The center sits on Chagrin Blvd. just minutes from I-271. The area includes some of the highest-income suburbs in the state. Households of families within one mile have an average income of $146,701 and almost 250,000 people live within five miles.
“The Pavilion is a perfect example of Devonshire’s acquisition philosophy – grocery-anchored, value-oriented, national tenants, high cash flow with upside and in an attractive sub-market,” says Mike Denman, president of real estate operations for Devonshire. “We also see it as a great opportunity to establish relationships with national tenants, like Stein Mart and Petco, who don’t currently have stores in any of our other properties.”