Colorado Real Estate Journal -
Forest City Enterprises Inc., as part of a larger corporate strategy, has sold Quebec Square, its 210,000-square-foot power center at Stapleton, for $34.25 million. The buyer was Quebec Square CMH LLC, a private family trust from California. The sale generated net proceeds of about $8 million to Forest City, representing an effective cap rate of 6.4 percent based on 2011 net operating income. Christopher Anton of SullivanHayes Brokerage was the transactional broker who handled the transaction of the shopping center at Smith Road and Quebec Street in Denver. Major tenants in the center include Office Depot, PetSmart, Ross Dress for Less, Big 5 Sporting Goods, Famous Footwear, Party City, Rue 21 and Payless Shoes. The sale did not include the Walmart, Sam’s Club and Home Depot buildings. The center was approximately 95 percent occupied at the time of the sale. The sale price equates to about $163 per sf. "We're pleased to complete this sale," David J. LaRue, Forest City president and chief executive officer, said in a statement. “The disposition of this center is part of our retail strategy to focus on our regional malls and anchored lifestyle centers around the country, as well as urban retail in our New York core market.” The company plans to use proceeds from this and future dispositions to pay down debt, reinvest in its portfolio and selectively activate new development with a focus on existing entitlement. Forest City will continue to manage Quebec Square on behalf of the new owner. Anton, a 38-year veteran in commercial real estate, used his long list of relationships to put together the deal. “It was an off-market transaction,” Anton said. “It was not listed. It was as if the stars and planets were all lined up. Forest City is getting out of these types of business, as they generally do larger deals than power centers like this.” Often, in these types of deals, the purchaser is an institutional buyer. “In this case, it was a private family trust, not an institutional investor,” Anton said. “Some of the family members live in different cities, but I think they are primarily from Southern California. It was a 1031 exchange for them. They were coming out of a California property and decided to deploy the assets elsewhere. It was a very complex transaction. It involved the buyer assuming the debt on Quebec Square. That probably delayed the deal by a couple of months, just by itself.” Anton first approached the buyer about a year ago. He said that Dan Miller of SullivanHayes has a relationship with Forest City going back about 10 years. “He has done a great job leasing properties for them at Stapleton, which made the deal a little more seamless than in some cases.” Anton said sometimes property owners feel they need to be represented by the large brokerage firms to get the widest exposure, and hopefully, the highest price for their properties. Both the buyers and sellers in this case are very “sophisticated” and understood the value of Quebec Square, he said. “When you are dealing with sophisticated parties, I would suggest that any pension fund, any REIT and publicly traded company that have their properties appraised every quarter knows what they can expect to sell a property for,” Anton said. The buyer of Quebec Square also was equally as sophisticated as any institutional investor, having done a number of 1031 exchanges to defer paying taxes on capital gains, he said. Because Forest City had a good handle on the value of Quebec Square, “the hard part was finding a willing, able and capable buyer to close.” The Quebec Square sale was a good deal for Forest City and the buyer, Anton said. “It was a fair deal. It was a fair deal for both sides.”