The Real Reporter
December 05, 2017 — Joe Clements
WEST LEBANON, NH—There are parts of the United States where retail is in deep, intractable trouble, but a 230,000-sf portfolio of three shopping centers here in mid-state New Hampshire seems insulated from those struggles given the entire assemblage has just been bought by Davis Cos. of Boston. Newmark negotiated the $27.1 million exchange on behalf of seller Dead River Properties and also procured the buyer of the premier assets that host a lineup of national brands, with West Lebanon’s location bordering Vermont a leading factor in the resilience of the centers.
One of those would be the namesake anchor of Kmart Plaza along Route 12A at Interstate 89 where the chain fills nearly half of the portfolio’s entire inventory, 106,000 sf. Kmart’s well-documented woes fighting the Internet and a glut of retail space are not evident at one of its best performers where annual sales are $13.6 million—a healthy $128 per sf—and its Blue Light special rent of a bargain-basement $1.79 per sf is seen as a potential source for future upside.
TJ Maxx (24,800 sf), Jo-Ann Fabrics (15,575 sf) and Rent-A-Center (4,425 sf) are among the national denizens in the 179,000-sf Kmart Plaza, from which 63 percent of the portfolio’s net operating income is derived. Chili’s, Payless and Supercuts also call the plaza home, as do local and regional draws on the 11-tenant roster of a property considered a key attraction along West Lebanon’s major retail corridor.
North Country Plaza also boasts a Route 12A presence, the 20,700-sf center at 80 percent occupancy when it traded. There are a half dozen retailers there who represent 19 percent of portfolio NOI, including Mattress Firm occupying the most at 5,750 sf, followed by a 4,500-sf Panera Bread and Verizon leasing 2,000 sf. Miracle Ear is in 1,200 sf and NgL Nails filling 1,200 sf round out the tenants. The available space is in suites of 1,200 sf and 3,000 sf.
Miracle Mile Shopping Center does not have direct frontage on Route 12A but is close enough to tap into the consumer energy, according to Newmark. It contributes the remaining 18 percent of portfolio NOI and its 30,300 sf is 87 percent cash-flowing and leased to Clear Choice MD, Fields of Vision Eye Care and Luxury Nails, among others. There are two independent eating establishments as well, a Chinese restaurant and a Mexican restaurant.
Davis Cos. CEO Jonathan G. Davis was unavailable to discuss the New Hampshire purchase which follows closely on the heels of the firm last month landing a pair of Wegman’s-anchored centers outside Rochester, NY. Newmark retail leaders have confirmed the New Hampshire agreement, with Managing Director Justin M. Smith alluding to the $43 million Empire State trade which Newmark also listed as being part of the buyer’s growing interest in a sector that some investors have begun embracing despite broad-based concerns regarding Amazon and its ilk who are targeting consumers.
Known as the Windalier Portfolio, the West Lebanon assets had the track record to entice a number of suitors, Smith reports. “Encompassing three attractive retail assets within a super-regional shopping hub, Windalier Portfolio is a highly desirable portfolio that generated a very competitive bidding process,” Smith relays in explaining this is the last of Dead River’s West Lebanon retail holdings, the firm having divested Powerhouse Plaza two years earlier to Eastern Real Estate, another Massachusetts-based investor. The same brokerage contingent was exclusive agent for that $12.3 million trade as well.
Geoffrey Millerd, founder of Newmark’s retail sales team, maintains both portfolios brokered by his firm in the two recent listings won by Davis Cos.suggest the doom and gloom facing brick-and-mortar retailers is not universal. “The Davis Companies is capitalizing on a tremendous opportunity to acquire extremely productive retail assets in top-tier secondary markets at terrific yields,” Millerd outlines, adding that “there is no denying that retail is transforming; however, we feel strongly that well-located shopping centers with retailers that are highly productive will continue to realize unmatched occupancy and leasing momentum.”