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EGG HARBOR TWP., NJ-Cedar Shopping Centers Inc. has agreed to buy Shore Mall, a 620,000-sf, one-level enclosed shopping center on 75 acres, for $33.65 million. The deal also includes an adjacent 50-acre site for $2 million, running the total sale price to $35.65 million and representing a cap rate of about 8.3% on existing in-place unleveraged NOI, according to details released by the REIT.

The sellers of both the mall and the adjacent undeveloped site are partnerships in which Leo S. Ullman, CEO of the Port Washington, NY-based Cedar Shopping Centers, owned a share of approximately 8% as a limited partner. The partnerships have owned both properties for almost 20 years, and Cedar Shopping Centers has managed the property for most of that time.

"The mall property is a major component of our redevelopment pipeline and strategy," says Tom O'Keeffe, Cedar's CFO. The adjacent site has an estimated build-out capability of another 200,000 sf of retail space, and the existing Shore Mall itself also becomes the largest property in Cedar's current portfolio, which is dominated by grocery-anchored strips.

"It is a very large property that we are acquiring at an attractive initial return," O'Keeffe says. During the next three years we expect, either jointly or by ourselves, to create a redevelopment plan that would almost certainly include a 'de-malling' of the property."

Cedar will also take on certain installment payments totaling about $3.1 million, payable through January 2009 to the holder of preferred partnership interests. "The time needed to develop the plan and the related permitting process is expected to coincide with the three years remaining on the existing financing," O'Keeffe says. "We look to this property in the long run as adding materially to shareholder values."

The purchase price is being funded by assumption of just under $31 million in first mortgage financing at 7.01%, due August 2008, according to information released by Cedar. The rest of the purchase price will be funded from the company's revolving credit facility.

Located just off the Garden State Parkway about seven miles from Atlantic City, the mall is anchored by a 167,200-sf Boscov's department store that is expected to be expanded by more than 12,000 sf this year. Other anchors include Value City (144,000 sf) and Burlington Coat Factory (85,000 sf). All three anchors recently extended their leases, according to O'Keeffe.

Other tenants include KB Toys, Radio Shack, GNC, a Hallmark Gold Crown store and TGI Friday's. A Carrabba's restaurant is also slated to open on-site later this year. Overall, Shore Mall is 92% leased with approximately 50,000 sf available. "Negotiations with potential tenants for much of the vacancy are pending," according to O'Keeffe.

Instant Insights /

Mall, Adjacent Site Trade for $36M

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