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VOL. 125 | NO. 65 | Monday, April 5, 2010

Raleigh-Bartlett Strip Center Fills Back Up

By Eric Smith

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ORIX Capital Markets, a Dallas-based company operating as the special servicer for a North Memphis retail center, is working to quickly turn around a property once headed for foreclosure.

Village on the Pike at 2974 Covington Pike between Raleigh and Bartlett already is on the upswing thanks to a new owner in ORIX and new leasing and management agent in CB Richard Ellis Memphis.

Built in 1987, the 37,606-square-foot Village on the Pike sits on the southeast corner of Covington Pike and Stage Road.

The center suffered when Walgreens left the anchor space and moved across the street, and also when the Dixie Queen closed its restaurant on an outparcel.

ORIX in early March formally took ownership of the center in a $500,000 substitute trustee’s deed. The center has an appraised value of $2.7 million, according to the Shelby County Assessor of Property’s 2009 information.

Mike Moran, CEO of ORIX Capital Markets, said that when the previous owner, CCM #1 Ltd. of Memphis, defaulted on its loan, the company was contracted by the lender, U.S. Bank, to reposition the property.

Now ORIX is hoping to improve on the Village on the Pike’s 79 percent occupancy with hopes of selling to a long-term owner.

“We try to maximize the recovery of the trust relative to the value of the loan that it had,” Moran said. “Our plan is to lease it up, and once we think we’ve maximized value it would be to sell the property.”

The company has gotten off to a good start now that CBRE has landed Dollar General to fill the old Walgreens space.

The discount retailer, which is occupying 11,132 square feet, opened last week. It joined Gentle Care Animal Hospital, Bob’s Tropicals (a tropical fish store) and Subway in the center. Also, a local chicken and fish restaurant will soon occupy the old Dixie Queen.

DSI Renal Inc., a Nashville-based provider of dialysis clinics, has signed a 4,400-square foot lease for the center and should be in place this summer. It will be the company’s eighth Memphis location.

Only a few bays remain in the center, ranging from 1,400 to 8,193 square feet.

Scott Barton, senior vice president for CBRE Memphis’ retail services division, called Village on the Pike a “success story” because of how quickly leasing has picked up since ORIX took over.

One advantage has been ORIX’s commitment to making improvements to the property, from replacing the roof to painting the building. Moran said the company will begin upgrading the parking lot this month.

“It already looks so much better than it did before. It’s remarkable,” Barton said. “All of a sudden, people are calling now. Everybody wants to be there now that the center looks better and has a lot more activity. We’re pleased.”

Barton called ORIX a “great landlord” to work with, citing CBRE’s partnering with the firm on the Summer Oaks center at Summer and Waring roads, where a big box was converted to a well-performing asset.

One advantage for Village on the Pike is its location on a hard corner and its proximity to a pair of competing retail drug stores. Walgreens is on the northeast corner and CVS is building a pharmacy on the southwest corner.

Those factors, coupled with the new owner upgrades, should help the intersection’s traffic and therefore the center’s occupancy moving forward.

“It is a strong commercial location, always has been,” Barton said. “It may have experienced some level of decline over the last five to 10 years, but really all it took was a little TLC and couple of dominoes to fall in the right direction and now we’ve been able to turn things around.”

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