SOUTHLAKE, TX-Inland Western Retail Real Estate Trust Inc. has made its first major investment in a mixed-use project by paying $142.9 million for a 25% stake in Southlake Town Square. The Oak Brook, IL-based REIT will act as a minority partner in Southlake Town Square, while project developer Cooper and Stebbins LP will maintain its majority partner status.

“Our investment in Southlake was a way to take out Cooper and Stebbins’ limited partners and expand the project,” says Matt Tice, who negotiated the transaction for Inland.

Tice tells GSR that Inland Western’s investment in Southlake Town Square is the first large-scale partnership it has entered into. “The comfort level that we have with Cooper and Stebbins is what led us to do partnership instead of the regular acquisition,” he says, noting that Inland has known the developer for more than 15 years.

At total build-out, Southlake Town Square, which is located at North Carroll Avenue and East Southlake Boulevard, will consist of more than three million sf of office, retail, hotel and residential space. Originally opened in March 1999, the project currently consists of 471,324 sf, in addition to a post office and a town hall that houses city and county offices and a municipal library. The existing space is 96% leased to tenants such as Crate & Barrel, William Sonoma, Pottery Barn and the Container Store, among others.

Cooper and Stebbins has broken ground on an additional 370,000 sf of retail space and 30 single-family brownstones, 26 of which have already been sold. A total of 90 brownstones will be developed in the coming year. Also, the developer will break ground in January on the Grand Avenue District, a collection of retail and restaurant uses, as well as a movie theater, bookstore, Hilton Hotel and office district. The grand opening of the District is scheduled for April 2006.

Inland Western made the investment in cash, but plans place financing on the property at a later date, according to its SEC documents. The REIT offers an annualized return of 6.5%.

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