Cedar Shopping Centers and RioCan Close $53M JV Purchase of Philly-Area Shopping Center

Located on a 37-acre site 40 miles outside of Philadelphia in the Greater Reading area, Exeter Commons sprouted up last year at the hands of the Goldenberg Group and Ironwood Property Group.

August 4, 2010
By Barbra Murray, Contributing Editor

Joint venture partners Cedar Shopping Centers and RioCan have just completed the acquisition of the unencumbered, 361,000-square-foot Exeter Commons in Exeter Township, Pa. The REITs shelled out $53 million for the 98 percent leased retail property, which was developed in 2009 at a cost of approximately $75 million.

Located on a 37-acre site 40 miles outside of Philadelphia in the Greater Reading area, Exeter Commons sprouted up last year at the hands of the Goldenberg Group and Ironwood Property Group. The tenant roster includes anchors Lowe’s Home Improvement Center and Giant Food Stores, which occupy 171,000 square feet and 82,000 square feet, respectively, under lease agreements that are scheduled to expire or be renewed in 2029. Additionally, Target occupies a 133,000-square-foot space as a shadow anchor.

A portion of the acquisition was financed with a $30 million loan obtained from New York Life Insurance Company. With its 80 percent stake in the joint venture, RioCan took responsibility for $42.4 million of the purchase price.

Like Exeter Commons, the country’s premier shopping centers anchored by grocery stores, national discount chains and home improvement centers and the like are faring relatively well. “The A-plus centers, the best of the best, are not having any issues with their tenants,” Alex Bieri, leasing representative with retail real estate consulting firm Bieri Company, told CPE. “It’s the Class B and C centers that are struggling. As time goes on, they’re going to fill up, but there’s still a lot of scrutiny on leasing deals from lenders. That’s the biggest issue.”

Lenders, Bieri added, are not fans of the concessions landlords have to make, such as kickout clauses, co-tenancy provisions and free rent. “There’s a disconnect between lenders and landlords,” he said. “Landlords understand that their properties are only as good as their tenants, but lenders believe the properties are only as good as what price they can lease for. It all comes back to how retailers are performing.”