The biggest retail property trades of the year so far, probably totaling well over $100 million, were the quietest — because three weren’t real estate transactions and one involved out-of-state interests.
The most recent was the July sale of Bryant Square Shopping Center in Edmond for $38.8 million, or $141.34 per square foot.
Suburban Chicago-based Inland American, a real estate investment trust, bought the 274,500-square-foot center at S Bryant Avenue and Second Street from a group of tenant-in-common investment groups put together by Los Angeles-based SCI Real Estate Investments.
Inland American owns several retail properties in the Oklahoma City area, including 240 Penn Park at Interstate 240 and S Pennsylvania Avenue and Memorial Square at 13810 N Pennsylvania Ave.
The transaction between institutional investment vehicles said as much about the needs of national investors as it did about the local property market, said Jim Parrack, senior vice president of retail for Price Edwards & Co.
“There is a lot of interest in our market from funds and institutional investors, which is reflective, one, of how much money there is available by those funds to invest in real estate and, two, the fact that those funds view Oklahoma City differently than they used to, particularly on the retail side,” Parrack said.
Such investors have a bifurcating impact on local markets by pushing prices up even as they have higher tolerance for lower capitalization rates, he said, referring to the standard way of calculating value based on lease income over time.
“The price is on the high side because of the level of intensity by those types of investors. By their nature, those institutional investors will accept a lower rate of return, which drives the cap rate down and drives the price up,” Parrack said. “It puts it into a different realm than most local investors would be willing to spend.”
Not a property deal
The biggest and quietest exchange was earlier this year when Indianapolis-based Kite Properties acquired the entire portfolio of Inland Diversified Real Estate Trust Inc., another Chicago-area REIT, in a $2.1 billion stock transaction that included three popular Oklahoma City-area shopping centers.
“It doubled the size of Kite. Kite has been in business a long time and is a well-known real estate investor in the Midwest,” Parrack said of the February merger.
Because it was not a property transaction, the prices assigned to each property are unknown. But Inland Diversified’s purchase prices from three years ago are suggestive.
Inland Diversified acquired Silver Springs Pointe, a 135,028-square-foot shopping center at 9001 Northwest Passage, near Northwest Expressway and Council Road, for $16 million in April 2001; bought University Town Center, which is phase one of University North Park in Norman, for $32.5 million in May 2011; and bought Shops at Moore, in Moore, out of bankruptcy for $38.75 million, in July 2011.
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