Atlanta-based developer Ben Carter’s sale May 30 of his 50 percent stake in the Town Center for $375 million is one of the highest prices paid for a mall since the downturn, according to today’s Wall Street Journal.
The Journal reported Deutsche Asset & Wealth Management, an arm of Deutsche Bank AG, bought Carter’s stake in the Town Center, which the Daily Record reported last week. The regional shopping center comprises 176 stores and features exclusive retailers such as Louis Vuitton and Apple.
That deal values the mall at $750 million, the Journal reported, which is what an earlier real estate report estimated. Simon Property Group, which owns the other 50 percent, continues to manage the mall.
The daily business newspaper also said that value does not include $270 million in debt on the property, citing unidentified people familiar with the transaction.
The Journal reported the St. Johns Town Center’s occupancy rate is a strong 99 percent and sales are $650 and $700 a square foot, attributing the information to Carter and brokers who worked on the deal.
Based on those sales, the Journal reports the Town Center, built in phases beginning in 2005, is rated between an “A and A -rated mall.”
The highest-quality malls in the country, called “A ” malls, produced $945 in sales per square foot of space, while the lowest-quality grade, called D malls, produced $140 a square foot, according to Green Street Advisors, a Newport Beach, Calif., real-estate research firm.
The Town Center’s sale to Deutsche is a good sign for owners of similar high-quality malls, according to a Green Street analyst.
“These high-end transactions are few and far between. This transaction gives us a lot of confidence that values are holding up at the high end,” said analyst Daniel Busch to the Journal.
That occupancy rate means there are few, and probably fleeting, empty storefronts because new retailers quickly move in.
According to the Journal, the high price of the deal is reflected in how much Deutsche will get in yield, or the capitalization rate.
The cap rate for the St. Johns Town Center is about 4 percent, thought to be one of the lowest cap rates for the sale of a mall since the downturn, the Journal reports.
The cap rate measures the ratio of a property’s annual net income to its value. Falling cap rates typically reflect rising values. The average this year on mall sales has been 5.8 percent, down from 6.8 percent last year, the Journal reported.
The Journal referred to the Town Center’s size as 621,000 square feet, although it generally is referred to as an almost 1.2 million-square-foot open-air lifestyle center.
The paper pointed out that Dillard’s Inc. and Target Corp. own their own stores. Duval County property records show Target owns its property there and that Higbee Co., in care of Dillard’s Property Tax Department, owns the Dillard’s store.
Those stores total a gross retail area of 391,707 square feet.
As shoppers know and travelers along Butler Boulevard and Gate Parkway suspect, the St. Johns Town Center is considered a high-quality and successful shopping center.