HOUSTON-Festival Properties Inc. has expanded its local portfolio with the acquisition of Stella Link Center, a 99,727-square-foot community shopping center anchored by Conn’s, Citi Trends and O’Reilly’s Auto Parts. The 1960s-era, infill asset traded for $6.85 million, or $69 per square foot, and achieved an 8.36% cap rate.

The seller, Cincinnati-based Phillips Edison & Company tapped Hanley Investment Group Real Estate Advisors of Irvine, CA, to market the shopping center. Eric P. Wohl and Edward B. Hanley represented the seller, while Marvin Stapper of M.M. Stapper Company in Houston represented Festival Properties.

Situated on 7.58 acres at 9117-9335 Stella Link Dr., the shopping center was built in 1960, and an additional building was added in 1978. The property was 76% occupied at the time of sale.

Wohl tells GlobeSt.com that Stella Link Center initially received six strong offers and was in escrow to another buyer when a 21,000-square-foot tenant unexpectedly vacated the space, increasing its vacancy rate to 24%. “When that happened, we weren’t able to close the deal,” he recalls.

Festival Properties was one of the initial six offers, but didn’t win the deal at first because the bid was too low. “We stayed in contact with Festival and after the property fell out of escrow, we went back to them and closed the deal – they ended up being the perfect buyer,” Wohl says.

Wohl says Festival Properties will realize significant upside for Stella Link Center by backfilling vacant space and raising below-market rents. “The positive thing about Giant Dollar Store vacating its space is that the new owner can bring in a new tenant at a higher rental rate,” he explains. “The retailer was locked in for a long period of time at the center’s lowest rent.”