Also: Sabel plant in Sonoma sold to warehousing group
Kimco Realty Corp., one of the nation’s largest shopping center owners, sold a 66,000-square-foot shopping center in Vallejo to a Southern California investor for $12.9 million in what is thought to be the first such sale in Northern California this year.
The sale is one of four North Bay retail centers Kimco has been actively marketing for sale and among 50 “noncore” properties in 16 states the Hyde Park, N.Y.-based company wants to sell to help buoy its bottom line. The others in the North Bay are Novato Fair Shopping Center in Novato, Park Place in Vallejo and Ukiah Crossroads in Ukiah.
Yacoel Properties LLC of Newport Beach on June 4 purchased Glen Cove Shopping Center at 100-170 Robles Drive along Interstate 780. The effective capitalization rate for the transaction was 7.71 percent. The original asking price was $13.25 million.
The mall, anchored by a 50,360-square-foot Safeway store, is one of only two California grocery-anchored centers to close escrow this year and the first in Northern California, according to Dan Wald, whose team at Terranomics Retail Services represented Kimco and co-owner Prudential Real Estate Investors in the transaction. About a dozen and a half such properties typically trade hands by mid-year.
“And we think it portends a more positive third and fourth quarter for retail investment sales,” Mr. Wald said. “In fact, while many bemoan the lack of equity capital in the market, our team was able to bring 22 investors to the call for offers.”
Beside the stability of Safeway as an anchor and low vacancy in the center, one factor that grabbed investors’ attention was the about $10 million assumable loan, according to Mr. Wald.
“It’s endemic to the real estate investment business at the moment that acquisition debt is not readily available with low loan-to-value ratios and stringent, conservative underwriting,” he said.
An assumable loan also has been the sale strategy for the 133,000-square-foot Novato Fair center, whose major tenants are Safeway, Rite Aid and Big Lots, according to Mr. Wald. He declined to mention how many offers have been received for the property so far, except to say the number was “substantial.”
“When you get a deal that has a great yield, the market comes alive,” he said. “There is plenty of money on the sidelines.”
Holliday Fenoglio Fowler of San Francisco helped Kimco obtain a three-year adjustable-rate $13.6 million bridge loan in April from Wells Fargo Bank. According to commercial mortgage tracker Trepp, the previous loan from 2004 had $13.2 million remaining when it matured in April, and the $13.7 million original balance represented a loan-to-value ratio of 64 percent.
The 106,000-square-foot Ukiah Crossroads center, anchored by a 61,000-square-foot Raley’s supermarket, is in contract for sale and is expected to close escrow by the end of this month, according to Mr. Wald. The asking price was around $14 million.
Terranomics leasing specialists Mark Koenig and John Schaefer in the San Rafael office have been consulting on the Kimco sales. Katie Walsh and Annie Jabuka of Terranomics are handling leasing at Glen Cove.
Combined with $20 million in dividend and staff cutting, Kimco announced the sale of the “noncore” centers to bolster its bottom line. First-quarter net income plummeted to $26.6 million from $86.6 million in the first quarter of 2008, largely attributed to a steep drop in tenant sales.
Kimco has controlled about 1 million square feet in Sonoma, Napa, Mendocino and Marin counties. That includes the 349,000-square-foot South Napa Marketplace, 234,000 square feet in two Lakewood centers in Windsor and 41,500-square-foot Fulton Marketplace in Santa Rosa.
Kimco picked up many of the centers for sale with the acquisition of Pan Pacific Retail Properties in 2006. Of 35 Pan Pacific slated for sale at that time, Mr. Wald’s team sold Heritage Park in Suisun City in 2007.
Two longtime Sonoma residents have made their second purchase in the industrial area south of the city this year. Sonoma Warehouse Co. II, made up of former Sonoma sporting-goods wholesaler Bob Smalley Jr. and Sonoma-based concrete contractor Charlie Webster, on April 30 purchased the 14,400-square-foot former Sabel Engineering Corp. factory and the 2.5 acres it sits on at 20366 Eighth St. E. for $1.78 million.
Seller Herb Sabel had sold the company, known for coming up with a robotic bottom-loading case packer, in December to Minnesota-based Massman Automation Designs. He started the company in 1972 in Oakland and moved it to Sonoma four years later. After building more than 600 systems, including the recently introduced robotic top loader, Sabel ceased operations in Sonoma in early May.
Coming in behind Sabel as of June 15 is Vinodata LLC, which signed a five-year lease for the building, according to Coldwell Banker/NRT agent Jeff Schween, who brokered the sale and the new lease. Vinodata plans to upgrade insulation and climate control for the building to accommodate storage of high-end wine casegoods.
The newly organized company is bringing in wine from Phoenix, the Central Valley and San Francisco, the latter of which had been the company’s first choice for consolidation, according to Mr. Schween.
Sonoma Warehouse Co. acquired the property with long-term plans to maximize usage of the 2.5-acre site, which is “underserved and overparked,” according to Mr. Schween.
In January, Sonoma Warehouse purchased 4.71 acres of land nearby at 1010 Napa Road at the intersection with Eighth Street East. The property had approvals for a 90,000-square-foot project called Vineberg Light Industrial Park.
As has been typical of projects ready to start construction in the past few months, the project, now called Park Sonoma, was caught between changes in construction-lender ownership, according to Mr. Schween. That resolved, the project, with the site already graded, is set for construction to begin in two to three months.
The owners are said to have leasing interest from several companies involved in wine, olive oil, automotive and construction.
Bids could be taken this summer for some infrastructure work to serve an approved 646,000-square-foot warehouse building on part of a 218-acre property at the southwest corner of Airport Boulevard and Devlin Road near Napa County Airport, according to Doug Pope, managing member of Sacramento-based Headwaters Development Co. LLC.
Headwaters and RREEF Americas, a real estate investment part of Deutsche Bank, as Napa Industrial LLC won Napa County approval in January for a tentative map and use permit for the building on 39 acres of the property.
Details regarding the extension of Devlin and the construction of an overpass over the railroad tracks to bring the road to the property are being reviewed by county and American Canyon agencies as well as Union Pacific Railroad, according to Mr. Pope.
“Some tenants want to see progress on it to see it is happening, so we plan to get some infrastructure work started,” he said.
In other North Bay commercial real estate news, the Mendocino County Board of Supervisors on June 9 qualified Measure A for the November ballot. If successful at the polls, the measure would call for rezoning of the 74-acre former Masonite plant at the north end of Ukiah from industrial to mixed-use to accommodate an 800,000-square-foot retail and housing center proposed by Developers Diversified Realty.
Lowe’s Home Improvement last week filed an application to build a store in Vallejo. The North Carolina-based chain currently is seeking approval for a store in south Santa Rosa.
Submit items for this column to Jeff Quackenbush at firstname.lastname@example.org, 707-521-4256 or fax 707-521-5292.
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