Walmart at Center of Shopping Center Loans

MIAMI—Shopping centers are hot commodities in South Florida from a acquisition, leasing and lending perspective. Three retail complexes in the region just won $27 million in permanent financing.

Aztec Group managing directors Jason Shapiro and Jim Fried and director Sean Harrington secured the financing for the borrowers, a locally-owned retail investment group. The shopping centers include a property in Hialeah Gardens, the redevelopment of the former Hollywood Fashion Mall in Hollywood to be anchored by a Walmart Supercenter, and a Tamarac shopping center that will soon house a new Walmart Neighborhood Market.

Royal Gardens Plaza, a recently-completed 75,000-square-foot shopping center anchored by Aldi and A Ross Dress for Less store secured the largest loan at $12 million. The shopping center is located at the southeast corner of Hialeah Gardens Boulevard and West 80th Street and also includes Dollar General, Discovery Clothing, America's Best Contacts & Eyeglasses, and Pollo Tropical.

Aztec also arranged an $11.53 million loan on behalf of the same ownership for part of the redevelopment of the former Hollywood Fashion Mall. When completed, the redeveloped mall will feature 182,000-square-foot Walmart Supercenter as the anchor tenant. This financing was solely for the Walmart Supercenter component of redeveloped shopping center.

“With this transaction, we were able to secure an attractive 20-year fixed rate loan term for the client. One of the benefits and unique qualities of credit tenant lease financing, like for Walmart, is that interest rates can be locked in advance of the property being built and having current cash flow,” says Shapiro. “These terms are based on the credit strength of the tenant and a signed lease.”

Located at the corner of Hollywood Boulevard and State Road 441 in Western Broward County, the 40-acre site is in the final stages of demolition. Walmart will ground lease about 19 acres for development of a Supercenter. Other tenants include Pollo Tropical, TD Bank, and a RaceTrac gas station.

“The redevelopment of the former Hollywood Fashion Mall will be a welcome addition to the neighborhood following the mall's closing about 10 years ago,” said says Harrington. “The Walmart-anchored shopping center will offer a mix of retail services that will enhance the quality of life of local residents and serve as a catalyst for future investment in this community.”

In the third transaction, the Aztec team secured a $3.8 million loan for the existing Tamarac Square West Shopping Center located on the northwest corner of Pine Island Road and McNab Road. The retail center spans 120,000 square feet and includes an end-cap parcel of land slated for a 42,000-square-foot Walmart Neighborhood Market. Other tenants include Family Dollar, Dairy Queen, and The Tire Choice.

“With interest rates at historic lows, the lending environment is very attractive for this type of financing, particularly when you have a tenant with investment-grade credit like Walmart,” says Fried. “The addition of a supermarket brand like Walmart to the Tamarac Square property will complement the existing tenant roster, while offering shoppers once again an anchor supermarket to meet their shopping needs.”

Walmart is certainly a factor in these loans. Lenders, developers and investors both like Walmarts. A Walmart Neighborhood Market traded hands in Pensacola, FL in October. The price for the 42,296-square-foot retail asset was $4.1 million, representing a record low cap rate. As construction continues on the 62,000-square-foot shopping center here, the ownership of Palmetto Gardens Plazareports it has inked three new lease deals at the property. Work is also in progress on a new Walmart Neighborhood Store location, which will be the anchor for the center.

Mike Cohn, regional president and co-founder, Lennar Commercial, is not surprised to see the lending. “Florida's Dade County is a bit different than the rest of the Southeast,” he tells GlobeSt.com. “While job growth—typically high tech, medical or financial services—is driving growth in most places, Miami is a booming destination due to flight capital.”