Tops Friendly Markets has a new landlord at eight upstate New York stores after a Rochester-based development team joined with a Maryland firm to buy 11 shopping plazas for more than $150 million.
JADD Management LLC, a commercial real estate development and management group, partnered with Annaly Capital Management Inc., a publicly traded real estate investment trust, to acquire the grocery-anchored shopping centers from Cleveland-based DDR Corp.
The deal, which closed this week, includes nine plazas in New York, one in the Atlanta metro area and one in Chillicothe, Ohio. Eight of the nine in New York are anchored by or include Tops stores, while the two out-of-state plazas are anchored by Kroger Corp. stores, a chain based in Cincinnati.
“Anytime you can acquire a portfolio in your footprint, that’s what we love to do if we can,” said David M. Dworkin, a partner at JADD in Rochester, along with John W. August and Jeffrey A. Saeger. “Buffalo is a great market for us, and we’re going to continue to expand in Buffalo. We continue to look at opportunities. It’s a really strong, solid, stable market for us.”
In all, the portfolio includes 1.48 million square feet of space, including 1.28 million square feet in New York. The properties will be jointly owned by JADD and Annaly Commercial Real Estate Group, a subsidiary of the REIT, which has about $1.6 billion invested in commercial real estate loans and properties. JADD will manage them, however, led by Dworkin as the operating partner.
“We’re excited to partner with these guys,” Dworkin said. “It’s a great match for us. We’re like-minded, and it should be a very good joint venture relationship.”
“We believe that this portfolio displays our commitment to strategically building a broader equity investment profile within our commercial platform,” said Kevin Keyes, president of Annaly.
The transaction marks the latest sale of upstate retail plazas by DDR – formerly Developers Diversified Realty – since that REIT acquired 110 shopping centers from Benderson Development Co. in March 2004 for $2.3 billion.
That deal, DDR’s largest at the time, included 79 properties in New York State, with 52 of them in the Buffalo Niagara area, and launched the REIT into a major player in the region.
But when the floor fell out of the real estate market just three years later, prompting the financial crash and recession, DDR started selling properties to raise cash and refocus on other opportunities. It has since unloaded many of the properties it once held in New York to a host of different buyers, and now holds just 27 properties across the state – 20 of them in the eight-county Western New York area.
At the same time, DDR is still growing nationally, having $2.3 billion on “power” or “large-format” shopping center acquisitions in 2013 to add 17 million square feet of space. But it’s now focused on the nation’s largest metro areas.
The latest deal is also the third time in as many years that JADD has acquired a plaza from DDR in the Western New York area, following its purchases of Seneca Ridge in West Seneca in January 2012 and Sheridan Plaza at Sheridan Drive and Eggert Road and in Amherst in January 2014.
JADD, whose partners also own and run the second-generation commercial real estate brokerage LLD Enterprises, invests in real estate in New York, Florida, Louisiana, Maryland, Oklahoma and Pennsylvania. It also owns sizable tracts of land available for development, ranging from five acres to 290 acres. Besides Seneca Ridge, Sheridan Plaza and now the Tops plazas, JADD also owns some other smaller properties in the Buffalo area, plus other shopping centers and office buildings throughout the state. It also bought a shopping center in Elmira earlier this year
“This acquisition allows us to continue with our strategy of acquiring quality, necessity-based retail real estate,” Dworkin said. “Although our portfolio spans multiple states, we remain heavily concentrated in upstate New York, and that market has always served us well.”
The New York properties that were acquired include the Tops Plazas on Niagara Falls Boulevard at Robinson Road in Amherst, on Union Road at George Urban Boulevard in Cheektowaga, and at Crossroads Center on Southwestern Boulevard in Orchard Park, as well as on Route 19 in Warsaw and on Washington Street in Jamestown. JADD and Annaly also bought Tops Plazas in Leroy and Ontario, and the Panorama Plaza in Penfield, as well as the Culver Ridge Plaza in Irondequoit.
Culver Ridge, the largest at 280,000 square feet, is the only one that doesn’t have a grocery store. The other plazas range from 168,000 square feet for Crossroads in West Seneca to 74,000 square feet in Warsaw, which also has the smallest of the Tops stores, at 46,000 square feet. Other tenants in some of the plazas include Stein Mart, Aaron’s, Dollar Tree, Advance Auto Parts and Metro Mattress.
Dworkin said JADD will now try to fill out any vacancies in the new plazas, much the way it did with Seneca Ridge and especially Sheridan Plaza, which was half-empty when JADD bought it but is now 90 percent full. The firm will also spend money to improve facades, lighting and other features.
“Tops is a great tenant,” Dworkin said. “We’ll work with these guys to improve the centers. In the end, it’s a partnership with us. To the extent we can improve the shopping experience for their customers, we want to do that.”