GlobeSt.com EXCLUSIVE: $10M Plus Backs Retail Repositioning

Under the plan, more than $2 million has been set aside for renovations and re-tenanting of the 89,602-sf Alta Mesa, anchored by a 60,000-sf Kroger store, and 76,000-sf shuttered Kmart, Donald Silverman, Margaux's president, tells GlobeSt.com. The properties sit on 16 acres at 3510-3540 Altamesa Blvd. in southwest Fort Worth.

Jerry Reis of Property Advisers Realty Inc. in Irving was the only broker on the transactions, with the shopping center deed passing from its 20-year owner, ARAG Bavaria, a German life insurance company managed by the Metzler Realty Advisors in Seattle, and the Kmart title coming from one of the retail chain's creditors using Brandywine Realty Trust of Plymouth Meeting, PA, as asset manager. Reis says the Alta Mesa sale completed the German seller's US retreat, which drove the sale of a half dozen shopping centers.

Reis, who has been leasing Alta Mesa since 1994, says Silverman had the 23-year-old shopping center under contract when Kmart closed its doors about a year ago. The developer jumped on the opportunity to pick up an adjacent eight acres, another 76,000 sf and a location that was "viable for Kmart up to the very end," says Reis, who admitted to losing a few national names because the center's blocks weren't quite large enough. That problem, he says, is now solved as a multi-tenanting conversion takes shape for a 22-year-old Kmart box.

Before the shopping center changed hands, Reis and Silverman secured renewals, some for the short term, as they craft a plan to bring in more national names. Kroger last year converted the location into a Signature store, penning a new long-term lease for the site. The redevelopment will add 100,000 sf to the market, including two outparcels being carved from Kmart's parking lot. Construction, which will take about six months to complete, will begin this quarter on the 16-acre project, which is still in the design stage. The per sf rate will range from the mid-teens to $20 per sf.

"Hopefully by the time we're done, it will be leased up," Silverman says of an acquisition and renovation financed through First Bank in Irving. He says the joint venture partners will decide whether to hold for the long term or sell when the repositioning is done. "We think there's a lot of upside in the renovation," he says. The duo's other ventures are Village of Los Rios in Plano and Stonegate Plaza in Crowley.