HOUSTON-A joint venture between Inland Western Retail Real Estate Trust Inc. and RioCan Real Estate Investment Trust has acquired Sawyer Heights Village.

The 107,626-square-foot power center, located just outside the CBD, traded for $35 million.  With the closing of Sawyer Heights Village, the JV owns 1.42 million square feet of grocery and necessity-based power centers, according to Shane Garrison, chief investment officer of Inland Western. 

Garrison tells GlobeSt.com that the JV sourced the acquisition in an off-market transaction. The seller was Property Commerce, a Houston-based investment firm.

“Currently, the venture is focused on core, class A properties in the big four Texas markets – Houston, D/FW, Austin and San Antonio,” Garrison says, adding that about 50% of the JV’s existing portfolio is located in the Houston metro area. “We feel that Texas, and Houston in particular, will continue to be strong performers in terms of both employment growth and discretionary spending.”

Garrison points out that Houston is the fourth most populous city in the US, trailing New York, LA and Chicago. It recently ranked second in employment growth among the 10 most populous metro areas in the nation. 

“Additionally, it is still considered by many as the energy capital of world given it is home to more than 5,000 energy related firms,” Garrison says. “The city also has a very robust, vibrant health care sector that continues to draw talented and educated employees to the area.”

Constructed in 2007-2008, Sawyer Heights Village is shadow-anchored by Target. Other tenants include PetsMart, Staples, Arby’s, Taco Bell and The Vitamin Shoppe. At the time of closing, it was 90% occupied.

Garrison says the JV found many things to like about Sawyer Heights Village. Along with its dense, infill location, the center boasts a quarter mile of frontage along I-10 with a five-mile population of approximately 420,000 people.

“Also located on site (but separately owned) are the Sawyer Heights Lofts, which has 326 units and clearly adds vibrancy to the center,” Garrison notes. “Additionally, at 90% occupied, we feel there is still significant upside in the asset through the opportunity to increase occupancy by utilizing our numerous national and local tenant and broker relationships.”

Garrison says Inland’s Houston portfolio continues to perform “very well” and is currently about 92% leased. “Our JV assets with RioCan in Houston continue to outperform the greater market at 97% + occupied currently,” he adds.

The JV obtained an interest-only, 10-year CMBS loan for $18.7 million to acquire the property.