Macquarie Pulls Out of Center in $62M Sale

The 13-year-old center, at the northeast corner of 39th Street and Arrowhead Avenue, is 98% leased. Anchors include Kohl's, Best Buy, Bed Bath & Beyond, Barnes & Noble and Marshall's. The internal rate of return for the asset, on an unleveraged basis, since acquisition is about 11.4%, said Macquarie officials in a statement. Net passing rent at the property is $13.27 per square foot, according to the company's Web page. The company had valued the property at $66 million.

David Oakes, EVP of finance and chief investment officer for DDR, says his firm retained its 14.5% interest in the property, and will continue to manage the asset. Cole took on the remaining interest, he says. "For us, the transaction was to generate liquidity for Macquarie. We were also able to line up a large partner that is very well capitalized, has a great track record of making money and a long-term hold mindset for real estate. We've sold some properties 100% to Cole before, and now we're partnering with them for the first time."

Macquarie received $53 million in the sale, but had to pay about $33 million for a loan on the property, leaving about $20 million. The original venture paid about $49.1 million for the property in November 2003. The company is going to use the funds to pay down debt, it said in the statement. "The price achieved and the conditions agreed for the sale are pleasing given the current uncertainty in US credit markets," said CEO Luke Petherbridge in the statement.

Oakes tells GlobeSt.com that while the economy is hitting every part of the commercial real estate market, the properties his company owns are a little better off. His firm has 720 retail operating and development properties in 45 states, plus Puerto Rico and Brazil, totaling about 159 million square feet. "The majority of our tenants are discount-orientated, be it stores such as Wal-Mart or Target, the warehouse clubs or even TJ Maxx. The majority of what's sold at these properties are value propositions. There have been some high profile bankruptcies, and those have impacted us and every other landlord, but we continue to be relatively stable in a pretty challenging world."