A portfolio of open-air shopping plazas with major big-box tenants – including four properties near the Walden Galleria – will undergo some $20 million in renovations and upgrades after new owners took over this month.
A Westchester County property management company has acquired seven retail plazas in Western New York that had once been developed and owned by Benderson Development Company LLC, paying over $100 million for the local properties as part of a larger real estate purchase.
DLC Management Corp. of Tarrytown paid about $175 million in all to buy 11 properties in upstate New York, Tennessee, North Carolina and Arkansas, with a total of 2.578 million square feet of retail space. The deal includes $98.773 million for four plazas in Cheektowaga, one in Amherst and two in Batavia.
Specifically, the collection includes the Union Consumer Square on Union Road in Cheektowaga; Walden Consumer Square, Walden Place and 2015 Walden Avenue on Walden in Cheektowaga; as well as Premier Place on Transit Road in Amherst. It also includes Batavia Commons on West Main Street and the BJ’s Plaza on Lewiston Road, both in Batavia.
“We like the assets, we like the market, and we’re excited about digging in and bringing in some more retailers to these assets,” said Adam Ifshin, president and CEO of DLC, which he co-founded in 1991.
The properties are currently anchored by major retail stores such as Target, Walmart, BJ’s Wholesale Club, Sam’s Club, Bed Bath & Beyond, Marshall’s, Office Max, Kohl’s, Michael’s, Jo-Ann Fabrics, Advance Auto Parts, Dollar Tree, Ashley Furniture, Sears Outlet, GNC and Petsmart.
But there are still sizable vacancies in certain places, including 19,000 square feet in the former Wegmans Food Market at 2015 Walden that is now shared with Longhorn Steakhouse, adjacent to the new Cabela’s and Home2Suites that Benderson is building.
“When you buy a portfolio, not every asset is as good as others, but the assets overall have great tenants that we have longstanding relationships with,” Ifshin said. “All the tenants are value-oriented tenants, and that’s the space that we operate in.”
The properties also are generally in “real strong locations,” citing Walden Consumer Square and three other Erie County properties that are on the “ring road” around Walden Galleria. “To own a Target-anchored center with a Petsmart, a supermarket and a Michaels right across the highway from the Walden Galleria, to me, that’s great real estate,” he said.
Ifshin said DLC, a national owner and operator of retail plazas, now plans to market available space for lease to new tenants, while also investing significantly to enhance properties. “We’re in the business of leasing space,” he said. “We certainly plan to make improvements to a number of the assets.”
For example, he said DLC is awaiting potential leases from at least two tenants for the Longhorn building, while there’s already “a lot of tenant interest” in redoing Union Consumer Square, where a plan already is under development. There’s also “a fair amount of vacancy” at the Amherst plaza, anchored by Premier Wine & Spirits, Stein Mart and a Chipotle restaurant. “I think we can make material improvements there,” he said.
National tenants are interested in the locations in Batavia, “so that’s encouraging,” he added.
With the purchase, DLC now owns or operates 116 open-air shopping centers in 29 states, with 19.6 million square feet of space from Maine to San Diego but concentrated east of the Mississippi River.
The privately owned real estate firm has regional offices in Chicago, Atlanta and suburban Washington, D.C., with 102 professionals on staff.
DLC is acquiring the properties from a joint venture of Wall Street private-equity giant Blackstone Group and Cleveland-based DDR Corp., a publicly traded real estate investment trust.
DDR, in turn, had acquired the upstate properties from Benderson in 2004, as part of a giant real estate transaction, but it’s been steadily selling them off in recent years.
Last month, DDR unloaded another 11 shopping plazas – eight in upstate New York – to a joint venture of Rochester-based JADD Management LLC and Annaly Capital Management Inc., another REIT.
It also sold Union Road Plaza in Cheektowaga to Acquest Development in May.
The newest deal, DLC’s first acquisition from DDR and Blackstone, marks the largest real estate transaction in DLC’s history, with “high-quality assets” and “strong anchor tenants.” It’s also the firm’s first in Western New York, but not necessarily its last.
“We are an opportunistic, privately held group of real estate entrepreneurs. We’re always looking for good deals, where we believe we can take our expertise and make money,” Ifshin said. “I went to Buffalo because of the opportunity and the scale that we were able to get here. Sometimes it’s difficult to enter a market with just one asset, unless that asset has real size. And I think good stuff’s happening in Buffalo.”
Of the four properties outside New York, two are in Fayetteville, Ark., while one is in the Nashville suburb of Murfreesboro, Tenn., and the other is in Asheville, N.C.