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VOL. 121 | NO. 134 | Monday, July 3, 2006

Loeb Properties Adds Eight Shopping Centers To Retail Portfolio

Continues trend of buying new properties and selling old

By Andrew Ashby

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Loeb Properties'
New Centers:

Stage Road Shops, 14,196 square feet (SF), 7395 U.S. 64
Summer Shops, 6,800 SF, 5070 Summer Ave.
Kirby Whitten Shops, 12,040 SF, 3135 Kirby-Whitten Road
Daybreak Shops, 17,600 SF, 6490 Memphis-Arlington Road
Forest Hill Shops, 12,180 SF, 3133 Forest Hill Road
Houston Levee Shops, 8,260 SF, 1996 S. Houston Levee Road
Germantown Shops, 16,160 SF, 800 N. Germantown Parkway
American Shops, 13,500 SF, 4289 American Way

Loeb Properties Inc. recently grew its retail unit with the purchase of eight shopping centers for $12.7 million, a move that brings Loeb's retail portfolio to 104 properties.

The shopping centers were sold by contractors Stewart Austin and Michael Weiss as a package deal. But buying eight shopping centers in one transaction from one seller is not the norm, said Bob Loeb, president of Loeb Properties. Usually, the company buys one property at a time.

"You buy what's available, and this particular seller wanted to sell their whole portfolio," he said. "It was an all-or-nothing proposition, and we were fortunate to get them under contract and purchase them."

With the purchases, Loeb Properties now owns 110 retail, office and industrial properties, of which 104 (94.5 percent) are retail. With the exception of a 23-acre parcel in DeSoto County, all of the company's properties are in Tennessee, with the vast majority in Shelby County.

The new puchases include American Shops at 4289 American Way, Summer Shops at 5070 Summer Ave., Stage Road Shops at 7395 U.S. 64, Kirby Whitten Shops at 3135 Kirby-Whitten Road, Daybreak Shops at 6490 Memphis-Arlington Road, Forest Hill Shops at 3133 Forest Hill Road, Houston Levee Shops at 1996 S. Houston Levee Road and Germantown Shops at 800 N. Germantown Parkway. The company paid cash for the first two centers; the others were financed by an $8.6 million loan through Thrivent Financial for Lutherans.

Austin and Weiss built the shopping centers from 1990 to 2004.

"We like retail properties and we like the fact these properties were located in Germantown, Collierville, Bartlett and some in Memphis," Loeb said. "They were well-built properties in nice areas with good tenant profiles, so they were good properties for us to acquire."

Something old, something new

Loeb Properties has been selling its aging properties and buying newer real estate, Loeb said. It also has been selling property in blighted neighborhoods and those that contained struggling tenants.

"We've been doing the gin-rummy style of portfolio management: selling lesser attractive properties and buying more attractive properties," he said.

The company recently sold the 272-unit Prescott Place Apartments at 1747 Morlye Place for $5.3 million and the 100,000-square-foot Mendenhall Center at 2725 S. Mendenhall Road for $2.9 million.

"We took the proceeds of those sales and bought properties in Germantown, Bartlett and Collierville," Loeb said. "That's an upgrade in our book. It helps our business by improving the quality of the assets, the quality of our tenants and the ease of operation."

Pick 'n' choose

Loeb said the company will continue to focus on retail development and acquisitions in Shelby, DeSoto, Fayette, Tipton and Crittenden counties.

However, the company's focus on upscale properties extends to its development division as well.

The company in March completed construction of the 19,190-square-foot Belvedere Collection shopping center at 1680 Union Ave. Interest in the center has been heavy, Loeb said, but only five of the 11 retail spaces have been filled.

"We could have filled that thing up two or three times by now, but we're being very selective," he said. "When we select the right tenants, they help each other and they help the overall property. That makes it easier to operate the property in the long run."

Tenants include High Point Coffee, Baskin Robbins, B.A. Framer, Cellular South and Pei Wei Asian Diner.

An estimated 38,000 vehicles drive along Union Avenue past the center each day, but that's not the only feature drawing retail tenants. The Belvedere Collection also has upscale design elements such as recessed doorways, awnings, transom windows and ceramic tile roofs.

Friendly neighbors

Matt Prince, senior vice president of brokerage and development at Loeb Properties, said the eight recently purchased centers are a good fit for the company's retail portfolio.

"If fits because we have so many properties in and around those areas," he said. "For us, it made sense. We owned so many properties within close proximity to these properties, it made for ease of management and leasing."

The newly purchased Daybreak Shops in Bartlett is one example. Loeb Properties also owns St. Elmo Place, a shopping center just across Memphis-Arlington Road from Daybreak.

And the newly acquired Germantown Shops on Germantown Parkway are just north of Loeb's Trinity Commons and Trinity Creek shopping centers.

"So the property manager can pick this property up and logistically manage it very easily," Prince said.

It also helps Loeb Properties' leasing agents because they are familiar with lease rates in the market.

Loeb Properties' focus on retail development plays to one of the company's strengths, Prince said.

"All in all, retail is where we have a great deal of expertise, and we will continue to focus our energy and efforts in that area," he said.

Prince said Loeb Properties will continue to look for viable retail centers to purchase, but the company also will focus on overseeing its newest acquisitions.

"Our plans for these properties are to take them into our portfolio and provide excellent customer service to our new tenants," Prince said.

PROPERTY SALES 69 119 21,696
MORTGAGES 64 113 16,530
BANKRUPTCIES 28 64 6,781