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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.