Ramco-Gershenson Plans Expansion of Newly Acquired Colorado Shopping Center
- Sep 10, 2014
Ramco-Gershenson Properties Trust is planning to add about 100,000 square feet of retail to Front Range Village, an 810,000-square-foot shopping center in Fort Collins, Colo., it acquired this week for $128.3 million.
The company did not release the name of the seller, but The Coloradoan reported it was Bayer Properties of Birmingham, Ala. The newspaper stated Bayer Properties invested $115 million in the six-year-old property and received $22 million in tax incentives from the city.
Ramco-Gershenson, a Farmington Hills, Mich., REIT, is funding the purchase with cash and borrowings under its revolving line of credit, the sale of $100 million worth of senior unsecured notes and the disposition of non-core assets.
The REIT said in a news release that NYL Investors, L.L.C., a wholly owned subsidiary of New York Life Insurance Co., was issuing the private placement of the notes. The financing will consist of $50 million of notes with a 10-year term priced at a fixed interest rate of 4.16 percent and $50 million of notes with a 12-year term priced at a fixed interest rate of 4.30 percent. The sale of the notes should close by Nov. 4.
Stores at the mixed-use center on Harmony Road near the I-25 Expressway include Target, Lowe’s, Sprout’s Market, DSW, Cost Plus World Market, Staples, Party City, Toys ‘R Us/Babies ‘R Us and The Sports Authority. Restaurants include Five Guys Burgers and Fries and Panera Bread. The center has 78,000 square feet of office space leased to tenants like Microsoft and also houses the southeast branch of the Fort Collins Public Library.
“Front Range Village is a very exciting acquisition that features a strong line-up of the nation’s top retailers located in a dynamic, rapidly growing market,” Dennis Gershenson, president & CEO of the REIT, said in a news release. The company’s third asset in the state, he said it is initially accretive, even before adding value through new development. It was also able to secure funding through private placement debt at attractive interest rates.
On Aug. 25, the REIT said it had acquired Buttermilk Towne Center in Crescent Springs, Ky., near Cincinnati. The REIT paid $42 million for the 278,000-square-foot center that features Home Depot, Field & Stream, LA Fitness and Remke Market, among other retailers. It was the firm’s third acquisition in the Cincinnati market.
A month earlier, Ramco-Gershenson purchased two shopping centers in the Midwest for a total of $150 million. Woodbury Lakes is a 366,000-square-foot center in Woodbury, Minn., in the Twin Cities market. The second acquisition was Bridgewater Falls, a 630,000-square-foot center in Hamilton, Ohio, a northern suburb of Cincinnati.
Brinkman Partners—a Fort Collins commercial real estate brokerage, developer and manager—said in a recent Northern Colorado market report that there was 5 percent vacancy for retail properties in Fort Collins and the vacancy rates had been declining for all markets. The firm’s report stated, “Rent rates show modest increase in ‘A’ locations.”
Ramco-Gershenson owned 78 shopping centers and one office building as of June 30, with leasing at about 95.7 percent. In addition to Colorado, the REIT has properties in Michigan, Florida, Ohio, Georgia, Missouri, Wisconsin, Illinois, Indiana, New Jersey, Maryland, Virginia and Tennessee.