Burlington-based Linear Retail Properties and its partner, Principal Enterprise Capital, have paid $3.5 million for the Bourne Outlet Center, formerly the Tanger Outlet Center.
When the beautiful people – or anyone aspiring to as much – head south to Cape Cod, Linear Retail Properties will be there to greet them.
Sporting a boatload of money pursuing regional shopping centers, the Burlington-based real estate investment firm and its capital partner have bought the former Tanger Outlet Center in Bourne for $3.5 million. Encompassing just over 23,000 square feet, the property features a host of trendy fashion stores, including Izod, Liz Claiborne and Nine West. According to Linear President William J. Beckeman, the successful tenant mix has been enhanced by a location directly on the rotary leading to the nearby Bourne Bridge.
“It has great identity and visibility, and long-term, it is going to be a very solid retail property,” said Beckeman, citing a daily traffic count of 40,000 vehicles in peak season and a functional layout that has lured many of those passersby to stop at the single-level complex. The acquisition of what is now known as the Bourne Outlet Center from Inland Real Estate Exchange Corp. was Linear’s fourth real estate purchase this year and ninth since teaming up with Principal Enterprise Capital two years ago on a crusade to buy “convenience-oriented” retail in the Northeast.
Following the Bourne deal, the investment fund has spent about $70 million of its $200 million war chest. While a lofty amount has been placed, Beckeman reported that stiff competition for product has made the effort more challenging than it would be in a normal climate, concurring with other observers that the most popular assets are being aggressively overpriced. That is especially true for deals of $50 million and up, said Beckeman, whose firm has no specific deal limitation but has averaged $7 million and topped out with a $13.8 million center in Nashua, N.H.
Orchestrated by South Shore broker Michael Giancola, the Bourne Outlet Center transaction was an off-market deal, and Beckeman said Linear has relied on industry professionals and keeping its pulse on the investment landscape to fill its quota. Having once mapped every store in eastern Massachusetts, Beckeman certainly has the retail knowledge down pat, but he also credited a targeted investment plan and commitment to do business as other factors in securing opportunities. “We have the money and we understand what it is we are going after,” he said, enabling a perfect nine-for-nine in closing deals placed under agreement.
Linear and Principal will buy centers in the $1 million range, Beckeman said, and the fund also is designed to consider ground-up retail sites. Given the limitations caused by the competition, Beckeman said he is satisfied with the investment campaign to date.
Outpacing the Field
Virtually every property class has seen investor interest to date in 2005, but the retail arena continues to outperform the field, prompting some assets to trade at capitalization rates down into the 5 percent level. The ardor has prompted more owners to test the investment waters as the summer has progressed, and Beckeman expressed optimism that there will be additional properties in which to place capital in the coming months. As of this week, there will be at least two more on the block, as Spaulding & Slye Colliers has been retained to sell one center in Taunton and another in western Massachusetts.
No asking price has been established for Taunton Crossing, according to Spaulding & Slye principal James M. Koury and leader of the retail investment team. While one source said it could fetch upward of $20 million, Koury would only say that he anticipates there will be “plenty” of interest in the property, particularly given that Taunton Crossing is brand new construction, a favorite among certain capital sources. Totaling 85,000 square feet, Taunton Crossing is set to open next spring, with the owners already having secured T.J. Maxx, Office Max, Pier One and Michael’s to occupy the space. Spaulding & Slye is representing the developers, Taunton Land Development, whose principals are Michael Diguiseppe and Stephen F. Dubord.
Koury also will oversee the sale of South Hadley Square in South Hadley, which carries an asking price of just over $13 million. While it is a stand-alone Big Y Supermarket at present, the site offers the opportunity to create another 85,000 square feet of retail space on an 11-acre parcel. The buyer “can add a lot of value” to the site, Koury said, particularly since there are no tenant restrictions often seen at other supermarket-anchored retail centers. A pharmacy or liquor store would be acceptable, Koury said, while there are two out parcels that could support a restaurant or other use as well. “It’s a very desirable [opportunity],” said Koury, noting that Big Y is the dominating grocer in the region and explaining that the location at the intersection of busy Routes 33 and 202 makes the property accessible from surrounding communities such as Chicopee, Holyoke and Springfield.
Overall, the retail investment sales market has remained brisk through the traditionally slow summer season, said Koury, whose firm has already traded or has under agreement 11 retail properties representing $300 million in value thus far in 2005. The veteran broker, who has been selling retail in the region since the mid-1980s, said he has never seen the capital supply as deep as it is at present for that asset class, with stability oriented investors apparently lured by longer leases than seen for other product types, as well as the notion that people have to consume to survive. “Retail is the ideal property type to carry an investor through tough economic times,” said Koury, who said he anticipates both private and institutional capital will chase the Taunton and South Hadley offerings.
As for Linear, Beckeman said the firm also is actively bidding on several deals and hopes to celebrate another closing date in the near term. There are no specific plans to make any major changes to the latest conquest in Bourne, said Beckeman, whose firm also announced it has hired Finard & Co. of Burlington to manage that property. Milestone Assoc. of Natick will handle leasing duties for Linear.
