Walmart Market-Anchored Center Sees High Demand

ORLANDO— Vine Street Square has traded hands in a competitive bidding process. The Kissimmee shopping center boasts tenants like Walmart Neighborhood Market, Office Max, Dollar Tree, Humana, and a freestanding Outback Steakhouse. Financial terms of the deal were not disclosed.

Jim Michalak and Paul Bores of Plaza Advisors represented the seller, Kimco Realty Corp, in the transaction. The Phillips Edison Group LLC purchased the retail asset. No other brokers were involved in the sale.

“There have been very few trades that involved a Walmart Neighborhood Market,” Michalak tells GlobeSt.com. “This product type (WMNM) is relatively new to the capital markets. The number of inquiries was amazing. We received calls from a variety of buyer types that are located throughout the U.S. and in some limited capacity foreign investors.”

Located at the intersection of US 192 and Dyer Boulevard, the retail center is in the Orlando MSA. The shopping center, which was constructed in phases between 1986 and 1996, spans 120,699 square feet of leasable space. The retail property was 97.6% leased at the time of sale.

“We received between 10 and 20 offers,” Michalak says. “We could have garnered several more, however once we let prospective buyers know the anticipated pricing many elected to not submit offers. The entire transaction was pretty fast. We commenced marketing it in early March and closed last Monday.”

Michalak says offers rolled in from REITs, institutions, broker dealer funds as well as private equity investors submitted offers. He credits the aggressive bidding to the grocery-anchored status with an investment grade credit of Walmart.

Supply and demand factors are not in balance in the Orlando MSA. According to Michalak, there is an abundant amount of equity pursuing core type deals in the major markets. For certain assets, like Publix-anchored shopping centers, pricing is being driven to levels reflective of the 2003-2007 investment activity while opportunistic and value-add are second choice.

“Overall there is a decent amount of supply but many offerings are not attracting attention due to limited upside, secondary and/or tertiary markets or too high of risk factor,” Michalak says. “2012 volume is off to a surprisingly slow start. Lenders are active and cheap money is available. I am concerned that the inexpensive cost of capital is driving up prices and the refinance risk is very high, particularly for private investors.”