Colorado Real Estate Journal -
Denver-based Gart Properties recently paid $10.8 million for the Safeway-anchored Willow Run Shopping Center in Westminster. “It’s on 128th (Avenue) and Zuni (Street) and it is right smack in the middle of all those rooftops,” said Mark Sidell, president of Gart Properties. “It is in a very good area as far as population and an area that has very strong household incomes,” Sidell said. There are more than 245,000 consumers and 67,500 daytime employees within a three-mile radius of the 91,565-square-foot center, which was built in 2000 on an 11-acre site at 12900-12910 Zuni St., according to the listing broker, Faris Lee Investments of Irvine, Calif. Despite having a Safeway as an anchor, the center wasn’t performing well under its prior ownership. It is only about 80 percent leased. “Safeway is a national tenant and a really strong performer,” Sidell said. The problem was that the original ownership was a TIC, or a tenant-in-common, which allows small investors to pool their money to buy a property. The seller was TNP SRT Willow Run LLC, based in San Mateo, Calif. “It’s our understanding that the seller took the property back from the original TIC,” Sidell said. The problem was the TIC didn’t have the capital needed for things such as tenant improvements and paying leasing commissions, he said. “Despite a great location and a great anchor tenant with Safeway, they didn’t have the money available to move the needle,” Sidell said. “Truly this is a case of showing how important it is to have all the legs of the stool,” he continued. “You need a great site, but you also must have the ability to focus on the property and have the capital to meet the demands of the market,” Sidell said. Even though Gart has only owned it since Halloween, the response from prospective tenants has been “overwhelming,” Sidell said. “In fact, the response to Willow Creek is probably currently the strongest of any retail holding in our portfolio,” he said. Gart’s current retail portfolio tops 3.5 million sf. Willow Run could accommodate tenants from about 1,000 sf to 9,000 sf. “Right now, we are not looking to reconfigure it or a massive remodeling because we don’t think it needs that to succeed,” Sidell said However, he said they would consider moving some tenants around for the right tenant. In addition to Safeway, other tenants include Subway and Allstate. Outlying tenants that weren’t part of the deal include JP Morgan Chase, ConocoPhilips and McDonald’s. Willow Run is “shadowanchored” by a Home Depot, Kohl’s, Staples and Petco. Jeff Conover, who represented the seller along with fellow Faris Lee broker Tom Chichester, said Gart was “at the top of our list of investors we believed would see the value in the asset and proactively utilize its tenant and management relationship to fully maximize the investment.” Shaun Riley, also of Faris Lee, represented Gart Properties in the sale. The closing cap rate on the property was 6.65 percent. “Willow Run offered the buyer a property well below replacement cost at a low price per square foot of $118,” Riley said. “Additionally, the buyer appreciated the upside opportunity through leasing the 20 percent vacancy, creating potential for additional cash flow and added value,” Riley said. Sidell agreed. “I do think this is a perfect fit for our portfolio,” Sidell said.