The Sterling Organization Buys Pair of Grocery-Anchored Centers, May Add More to Expanding Minnesota Portfolio
IRC Retail Centers has sold two of its grocery-anchored shopping centers in the Minneapolis-St. Paul market and may have more sales pending.
The Sterling Organization announced that it bought two Cub Foods-anchored suburban malls for $41.7 million or approximately $136 per square foot. The two shopping centers were purchased through Sterling’s institutional grocery-anchored shopping center core fund, Sterling United Properties I.
The private equity investment firm paid $19.4 million for the 97,638-square-foot Shannon Square at 3717 Lexington Ave. N. in Arden Hills, and $22.3 million for Village Ten, a 208,127-square-foot retail center that ranges over the 2000 and 2100 blocks of Northdale Blvd. in Coon Rapids.
The sale closed on Thursday.
Both centers have a healthy roster of tenants including Life Time Fitness, Dollar Tree, Caribou Coffee, Great Clips, Subway, AAA, Chipotle, T-Mobile, The UPS Store and H&R Block. Shannon Square had an occupancy rate of 97 percent at the time of sale, while Village Ten is fully occupied.
The age of the buildings involved ranges from the early 1970s to the 2000s. The Coon Rapids location had a value of $22.25 million for taxes payable in 2019, according to Anoka County property records. Ramsey County valued the Arden Hills property at about $10.8 million for taxes payable in 2018, the most recent records available.
With the two retail centers in hand, Palm Beach, FL-based Sterling will now have five properties in Minnesota, with about 700,000 square feet of leasable space total. All are anchored by Cub Foods grocery stores.
The deal with Sterling will likely be the first of a string of transactions. On the IRC website, four more grocery-anchored retail sites are listed under its disposition tab as either on the market or “coming soon.”
Big Lake Town Square at 726 Martin Ave. is listed as currently for sale, and is being marketed by a team at the Minneapolis office of Colliers International.
Among other IRC retail properties that will soon hit the market are the Lunds & Byerlys-anchored shops at 511 East County Road 42 in Burnsville, Cub-anchored Champlin Marketplace at 11401 to 11468 Marketplace Dr. N. in Champlin, and an Aldi-anchored strip mall at 1320 Hwy 15 S. in Hutchinson.
IRC plans to bring a few more properties to market beyond these, said Colliers Broker Bob Pounds, though he was not able to disclose much more.
“IRC feels it an appropriate time to reap value from these properties,” said Pounds, who is working in tandem with brokers Tim Prinsen, Amy Senn, Lori Pounds and Lisa Sherman.
Formerly Inland Real Estate Corp., IRC is owned by New York City-based DRA Advisors. In March 2016, a fund managed by DRA executed a $2.3 billion deal to acquire Oakbrook, Illinois-based Inland and rebrand it as IRC Retail Centers.
Sterling is a national retail investment shop focused on value-add real estate and stabilized and core grocery-anchored shopping centers on behalf of the firm’s principals in partnership with institutional investors.
Executives at IRC and DRA were not immediately available for comment.
According to DRA’s website, the firm owns 25 properties in Minnesota, most of which are grocery-anchored retail developments. DRA also owns three large office buildings here: The MoneyGram and 1600 towers at 1600 Utica Ave. S. in Saint Louis Park, 605 Waterford Park in Plymouth and Wells Fargo Plaza at 7900 Xerxes Ave. S. in Bloomington.
