Davis Cos. Secures NY Retail Centers as Brixmor Reaps $43M Via NewmarkOctober 02, 2017 — By Joe Clements
GENESEO, NY—Already possessing CRE in Gotham and out to Long Island, Boston-based Davis Cos. is moving upstate in the Empire State via the purchase of two shopping center acquisitions this week in metropolitan Rochester, each anchored by a Wegman’s and both exclusives of the Newmark Capital Markets retail team advising seller Brixmor. Pricing for the assemblage of 444,650 sf is said to eclipse $43 million.
“I think the buyer has gotten a very good deal,” offers retail practice group founder Geoffrey Millerd in acknowledging a result of peddling Genesee Shopping Center in Geneseo and Hornell Plaza about 45 miles to the south in the asset’s namesake community. The latter property that has a 128,275-sf Walmart anchor along with the 75,100-sf Wegmans encompasses 253,325 sf overall and is 100 percent leased.
Genesee Shopping Center is 35 miles from downtown Rochester, its footprint of 191,325 sf at 90 percent occupancy with the 77,425-sf Wegmans its largest denizen. Eighty five percent of the property’s GLA is filled by national tenants, among them Dollar Tree, Game Stop, Kay Jewelers and Petsmart. Tractor Supply Co. has a 31,875-sf unit in the complex. The development trade area extends out 10 miles, that sphere comprising some 42,000 wallets and an annual household income pegged at $69,200.
Overseeing the bifurcated assignment with Millerd is Newmark US Head of Operations Robert E. Griffin Jr. and Managing Director Justin M. Smith, with other members being Associate Director Paul Penman, Financial Analyst Christian Brannelly and tenant services specialist Gloria Kuo. Millerd declined to identify the winning suitor or discuss pricing estimates, citing confidentiality agreements, but he did not deny the report, either, one that has been confirmed by multiple sources. TDC CEO Jonathan G. Davis also would not discuss the matter due to the same legalese.
Millerd did take time to laud his client for positioning the properties at a standard able to attract top-level tenants in both developments, and subsequently the assets were warmly received by investors when listed for sale, he recounts. “Brixmor did really well executing their plan, and they got a very compelling price for their hard work,” says Millerd while marveling at the response given the retail arena’s public flogging as an asset class struggling in the era of on-line shopping and overbuilding.
“We were really encouraged by the interest,” says Millerd. “It was very competitive and to me it underscores there are bidders who understand the value of that market, and this helps show there is still good liquidity in upstate New York.” relevant as the retail landscape fights against a highly pessimistic Credit Suisse forecast that predicts 25 percent of the nation’s retail inventory is doomed for darkness.
‘I think the buyer has found a very good investment.’
According to Smith, the sale of Genesee Shopping Center and Hornell Plaza came about partly due to shifting sands in the portfolios of retail REITs where analysts are promoting a departure from secondary and tertiary markets “in order to fund redevelopments of core holdings within their existing portfolio,” and Smith adds “this strategy has presented attractive buying opportunities,” as evidenced in the rising proclivity of private groups using well-capitalized funds to pick up the pieces, often well below replacement cost.
For TDC, the going in basis could be less than $100 per sf—at $43 million exactly, the rate would be $96 per sf for an assemblage of 444,650 sf. Given the cash-flowing nature the offering promises plus upside in 18,650 sf available for lease at Genesee Valley Shopping Center. Hornell Plaza also has a restaurant outparcel, 6.9 acres for future expansion and another opportunity to add 30,000 sf more to the current inventory.
As to the macro trends at play, Millerd agrees that many stores expanded too rapidly over the past decade, and the financial whims of Wall Street are stoking further turmoil—deemed unneeded and counterproductive in many ways—but he insists the apocalyptic analogy is overblown. “There is no reason to panic,” he says. “People have to understand that.” And indeed, as indicated in the New York assignments, there are plenty of capital sources running towards the arena hoping to take advantage of the exodus even as others head in the other direction.
Newmark’s own book of business would seem to support that optimism, with the Boston-based operation handling the New York trades having already topped $1 billion in sales volume this season. Millerd and Smith are also getting a wider view of the lens as members of a national retail contingent assisting fellow Newmark offices in such markets as the mid-Atlantic and southeast on their retail endeavors. “We are straight out,” Millerd says.Geoff Millerd Justin Smith Robert Griffin Jonathan Davis