The St. Louis Park, MN-based real estate investment firm Excelsior Group is behind the $13.65 million sale-leaseback deal for retailer Christopher & Banks Corp.’s Plymouth, MN headquarters building.
On April 23, Christopher & Banks announced that it had entered into an agreement to sell its 210,000-square-foot building at 2400 Xenium Ln. to “a private, unaffiliated investor group,” but did not disclose the buyer’s identity.
On Tuesday, a certificate of real estate value revealed that the building had been sold to an entity called 2400 Xenium LLC, which shares an address with The Excelsior Group. A warranty deed, mortgage document and lease agreement all dated April 27 showed that Excelsior Group is a controlling party of the LLC, according to records on file with Hennepin County.
The purchase was financed by an $8.9 million mortgage from Bloomington, MN-based MidCountry Bank.
The lease agreement with Christopher & Banks has a 15-year term, expiring in 2033.
Neither Christopher & Banks nor The Excelsior Group responded to repeated requests for comment.
Christopher & Banks’ HQ is a single-story flex building constructed in 1972 on a 12-acre lot just south and east of the junction between Interstate 494 and Highway 55. About 20 percent of the space is office, and the rest functions as a distribution center, said Colin Ryan of Colliers International’s Minneapolis office, which represented Christopher & Banks during the transaction.
The building last sold in 2001 when Christopher & Banks paid $8.75 million, or about $42 per square foot, to PGIM Inc., according to CoStar data.
See CoStar COMPS #3623179.
The property was assessed at $10.05 million for taxes payable in 2019, according to Hennepin County records.
Christopher & Banks is a specialty retailer that sells privately-branded women’s apparel and accessories. As of April, the company had 462 stores in 45 states.
According to an April 23 statement by CEO Keri Jones, the sale-leaseback deal is intended to give the company greater financial flexibility as it executes a turnaround plan.
Like many traditional retailers, the company has struggled over the last few years, and has been in the midst of a revamp of its offerings and real estate portfolio. Between 2016 and 2017, Christopher & Banks pruned its store count by about 6.1 percent, Interim Chief Financial Officer Marc Ungerman said during a March 8 earnings call.
He added that the company would return to growth over 2018, and that its store count would be relatively stable.
The sale-leaseback of its headquarters was already under consideration at the time. Then-interim CEO Joel Waller said Christopher & Banks was in discussions with three suitors, and would make a decision about the deal in three or four months’ time.
The property went on the market around Jan. 1 and got a “ton of interest”, Ryan noted.
“We had inquiries from private equity firms and some REITS, as well as local players,” Ryan said on Tuesday. “It was a very competitive process. We went with [The Excelsior Group] because we liked the local aspect of the ownership. Price and timing was a large factor as well, but local ownership was big component of it.”
