Publicly registered, non-traded REIT American Realty Capital – Retail Centers of America, Inc. has entered into an agreement to acquire the Prairie Towne Center in Schaumburg, Illinois. The seller of the property is Prairie Towne LLC.
The contract purchase price of Prairie Towne Center is $25.5 million, exclusive of closing costs. American Realty Capital – Retail Centers of America intends to fund 50 percent of the purchase price with proceeds from its ongoing IPO and the remainder with debt financing.
The company’s obligation to close upon the acquisition is subject to the satisfactory completion of a due diligence review of the property, among other conditions. There can be no assurance that the acquisition will be consummated.
The Prairie Towne Center has 289,000 rentable square feet and is 95.3 percent leased to seven tenants. Two tenants, Kohl’s Corp. (NYSE: KSS) and Lowe’s Companies Inc. (NYSE: LOW), represent approximately 90.5% of the annualized rental income of the property.
Kohl’s Corp. leases 107,000 rentable square feet under a lease that commenced in January 2003 and expires in January 2024. The lease contains no rental escalations during the original lease term. The lease does have ten renewal options of five years each. The annualized rental income for the initial lease term is approximately $0.8 million.
The lease to Lowe’s Companies Inc. contains approximately 158,000 rentable square feet; however, the suite is currently vacant. The lease commenced in July 2005, has a 20-year term and expires in July 2025. The lease contains two rental escalations of 10% in 2015 and 2020. The lease contains eight renewal options of five years each. The annualized rental income for the initial lease term is approximately $1.1 million.