Sterling Organization Continues Buying Retail Near Three-Figure Income Residents
Sterling Organization has acquired a retail portfolio located in areas surrounded by wealthy residents in the Pacific region of the U.S. The West Palm Beach, Florida-based firm purchased the assets through its Sterling United Properties fund series, which is targeting locations with grocery anchors.
The properties are in trade areas with average annual incomes of more than $220,000, which host 124,000 residents on average.
The portfolio is located in California and Hawaii. Just one of the shopping centers is 100 percent leased, which is Safeway Burlingame, located in downtown Burlingame on the San Francisco Peninsula. Safeway anchors the 70,174-square-foot property, which is joined by retailers including AT&T, StretchLab, Five Guys Burgers and Fries, Great Clips and Union Bank. Average income in the three-mile radius is $272,000 per annum.
The other two centers are near 100 percent occupancy, with Pleasanton Gateway Shopping Center in San Francisco's MSA, Pleasanton, being 99 percent leased. The 128,275-square-foot shopping center is also anchored by a Safeway and is joined by CVS, Starbucks, Wells Fargo, The Habit Burger Grill and Panda Express. Residential incomes are more than $259,000.
The Hawaii asset is known as Kapahulu Shopping Center in Kapahulu, which is currently 97 percent leased. With Safeway serving as the anchor, other major retailers at the 78,608-square-foot property include AT&T, Supercuts and Panda Express. Household earnings in the area exceed $137,000 on average.
Bob Dake, principal at Sterling, said that the move aligns with the firm's strategy under its fund that's seeking to take advantage of areas where there's limited retail availability that's also being exceeded by tenant demand.
"This portfolio acquisition presented a phenomenal and rare opportunity to add what we believe are three super-core trophy properties to our growing Sterling United Properties fund series," said Jordan Fried, principal at Sterling Organization, in a statement.
"Each shopping center is difficult-to-replicate, and all sit on sites within some of the country's most land-constrained and desirable trade areas. We expect the portfolio will continue to generate consistent, predictable, and growing cash flow for the benefit of the fund and our investor partners.'
The move marks its second announcement today of a major shopping center purchase. It also separately acquired 69,622-square-foot Pavilions Marketplace in West Hollywood. The location is anchored by a Pavilions (Albertsons) grocery store and is 89 percent leased, with the three-mile trade area hosting average incomes that exceed $194,000 per annum.
But it's not just a Pacific region of interest for Sterling. In July, it announced that it paid $93.2 million for Merchants Walk in the Atlanta Metro area. The 271,992-square-foot shopping center is anchored by a Whole Foods Market. For this purchase and the West Hollywood one, Sterling deployed its SVAP IV fund.
For Sterling, its investment strategy appears to follow a specific theme. It's not just targeting a specific region — but it's using the capital flexibility in funds to play offense and capitalize on well-located product that's surrounded by affluent residents, specifically in areas that average at least three-figure incomes.
Source: GlobeSt/ALM