Inland Real Estate Evaluating $28.12M Purchase of Park Avenue Shopping Center in Arkansas

Inland Real Estate Income Trust Inc (IREA) is evaluating the purchase of a fee simple interest in a 69,307 square foot retail center consisting of three single tenant buildings, three multi-tenant buildings and a two-level parking structure, known as Park Avenue Shopping Center, located in Little Rock, Arkansas.

The purchase price includes the:

(i) right to expand one of the three buildings by up to 9,500 square feet which would increase the total retail square footage of the property to 78,807 square feet; and

(ii) 7,489 square feet of existing vacant space of which 4,000 square feet is currently subject to a lease pursuant to which the tenant will begin paying rent when they occupy the space, which is currently expected to occur in March 2014.

The property is shadow anchored by Target’s newest format, which includes a grocery component, and an LA Fitness that Inland will not acquire and will not own.

IREA has entered into an agreement to acquire a fee simple interest in the property from SPC Park Avenue Limited Partnership and SPC Condo Limited Partnership, unaffiliated third parties, for approximately $28.12 million in cash, plus closing costs, of which $23.37 million is expected to be funded at closing.

IREA will be required to pay the seller an aggregate amount equal to approximately $4.75 million based on tenants taking possession of certain premises at the properties, opening for business and commencing to pay full rental payments as due under their respective leases. IREA says it does not believe closing costs will exceed $225,000.

Park Avenue Shopping Center is located at the corner of West Markham Street and South University Avenue, both major thoroughfares in the area. The property was constructed between 2008 and 2012. It is 95.0% leased and 89.2% occupied, which includes the three separate out parcel pads. The property is situated approximately five miles west of downtown Little Rock, directly across the street from a major hospital.

Staples, a national office supply store, leases 18,336 square feet, or approximately 26.5% of the total gross leasable area of the property, and pays annual base rent of approximately $339,000, or approximately 23.8% of total annual base rent of the property. Staples’s lease expires in February 2022, and there are three five – year renewal options, which may be exercised at the option of Staples as set forth in the lease.

Cheddars Casual Café, a national restaurant chain, which is on a ground lease for 7,918 square feet, or approximately 11.4% of the total gross leasable area and pays approximately $133,000, or approximately 9.3% of total annual base rent of the property. Cheddars Casual Café lease expires in October 2026, and there are three five -year renewal options, which may be exercised at the option of Cheddars Casual Café as set forth in the lease.

The other tenants leasing at least 2,000 square feet are Casual Make, Newk’s Eatery, Potbelly Sandwich Shop, Panera Bread, Carter’s, Verizon Wireless, Mattress Firm, Sprint, Radio Shack and two ground leases with AT&T and Jared Jewelers, respectively.