Linear, Principal Retail Fund Halfway to $300M

PEABODY, MA-An eight-year-old, 30,000-sf shopping plaza in this affluent Boston suburb is the latest acquisition by Linear Retail Properties LLC and Principal Enterprise Capital. More significantly, the $7.7 million deal pushes the partnership over the halfway mark to investing $300 million of institutional capital in southern New England retail. Peabody Gardens is the venture’s fifth transaction of 2007 and 39th since the fund was launched in late 2003.

“It’s a long race, and more needs to be done, but I’m encouraged,” Linear president William Beckeman tells GlobeSt.com. Among the first locally to recognize value in assembling bite-sized retail into a diverse pool, Linear has paid no more than $13.8 million in reaching the halfway milestone, a trek focusing on convenience-oriented centers in established or emerging locations. The fund has been—and will continue—to pursue pricier opportunities, pledges Beckeman, but he says managers have been prudent in not overpaying or chasing large trophies for the sake of getting money placed. When an appropriate target has been identified, however, the team has moved quickly and paid whatever necessary to win the venture, he adds, a notion seconded by brokers handling the Peabody process.

“They offered a very strong price and worked through every potential obstacle in a diligent and thoughtful manner,” says Richard Rostoff of Spectra Realty Associates, citing the seamless conclusion as showing why Linean and Principal “have an unrivaled track record for closing deals.” Rostoff was joined in negotiating the terms by Ralph Epstein and Richard Wolfson of Patriot Properties. Principal Enterprise Capital is a subsidiary of the Principal Financial Group of Iowa.

Supported by Principal’s real estate platform, Beckeman says he believes Linear’s staff of seasoned professionals has enabled the firm to decide which retail properties can perform, either on their own or via a repositioning effort. After completing the fund’s biggest deal in the $13.8 million purchase of Daniel Webster Plaza in Nashua, NH, the new owners implemented an extensive capital program and redid the façade. “That property looks fabulous now,” says Beckeman. Along with acquisition experts such as SVP Aubrey Cannuscio, another Linear principal is Joel Kadis, employed with Beckeman at the erstwhile Finard & Co. before moving over to Linear. Now operating as KeyPoint Partners, LLC, Finard & Co. had been among New England’s top retail real estate services firms in the region, with Kadis a leasing specialist.

Given its relative youth, not much needs to be done to spruce up Peabody Gardens, according to Beckeman, whose firm has hired Meredith & Grew as property manager and Conviser Property Group as exclusive leasing agent. Located less than a mile from Route 128 at the intersection of Lynnfield and Summit Sts, the property is 92% leased to such retailers as CVS Pharmacy, H&R Block, Movie Gallery and TD Banknorth. “It’s a great property,” says Beckeman, citing a daily traffic count approaching 50,000 vehicles due to the confluence of the two major streets and location near Centennial Park, a major business complex.

Linear’s leadership, including Beckeman, is heading to next week’s International Council of Shopping Centers spring convention in Las Vegas, NV, and the president says they hope to entertain additional opportunities with players looking to sell product in New England. As they prepare to begin placing the remaining funds, Beckeman says he is satisfied by the diversity in both product type and geography, having recently acquired 16,000-sf of retail in downtown Boston through a condominium structure, and this month paying $1.5 million for a 1,700-sf retail condo near Boston’s Faneuil Hall. That property at 100 State St. is fully leased to Cambridge Eye Doctors.