VOL. 124 | NO. 203 | Thursday, October 15, 2009
Colliers Takes On Tough Project
By Eric Smith
A retail portfolio hit hard by the slumping economy has a new temporary owner and a new leasing/management team. Now those entities are charged with repositioning the assets so a buyer can step in and have a better shot at building long-term success.
The Shops at Rock Creek and Cordova Station South off North Germantown Parkway and The Shoppes at Misty Meadows on Hacks Cross Road have been taken over by Centerline Servicing Inc., the properties’ receiver, following foreclosure.
Centerline has contracted the Memphis office of Colliers Wilkinson Snowden to lease, manage and find a new owner or owners for the properties, which were sold back to the lenders Friday on the steps of the Shelby County Courthouse.
Andrew Phillips, a broker at Colliers Wilkinson Snowden, said the team working on those properties is just getting started, having been given the portfolio within the past couple of days.
“We are gearing up to take over the management and leasing and everything along with our (Colliers) Management Services group and our Colliers Atlanta team as well,” he said. “So we’re really just gearing up for it. We haven’t started it yet.”
Phillips said all the centers, particularly the Shops at Rock Creek, suffered from a consolidation of stores. For example, Rock Creek lost Golf Galaxy when the big box was bought by Dick’s Sporting Goods, which built a store across the street at Countrywood Crossing.
“The buyer of that property in particular was really fighting an uphill battle from the start,” Phillips said. “But we do feel that’s a well-positioned asset in that market. We are very confident that we’ll be able to assist Centerline in getting some leases done there.”
Phillips said the centers are perfectly located for retail success, particularly the Shops at Rock Creek, because of its proximity to Interstate 40 and a host of other centers, from Countrywood across the street to Wolfchase Galleria up Germantown Parkway.
“Our first and foremost goal on all three properties is to help stabilize them, and to get the tenant base up,” Phillips said. “Then we can get into the disposition side.”
The 61,000-square-foot Shops at Rock Creek was built in early 2006. It contains two buildings on 5.5 acres on the east side of Germantown Parkway south of Interstate 40.
The property was sold back to the lender, Wells Fargo NA, for $6.3 million. The center is 65.8 percent occupied, as of the last rent roll compiled for the foreclosure proceedings against the owners, Kapree Rock Creek LLC (83.5 percent) and Memphis Rock Creek LLC (16.5 percent).
The Shops at Rock Creek has five tenants – including Bassett Furniture and Capel Rugs – and contains three vacant spaces totaling almost 21,000 square feet.
Recovery long in coming
The 10,246-square-foot Cordova Station was built in 2003. The center contains one building on one acre on the east side of Germantown Parkway near Macon Road. The property was sold back to the lender, U.S. Bank NA, for $1.1 million.
The center is 53.4 percent occupied as of the most recent rent roll, with two of the four suites totaling 4,960 square feet vacant. Another space has been vacated since that rent roll was taken.
As for The Shoppes at Misty Meadows, that two-parcel retail center at 3800 Hacks Cross Road in Southeast Shelby County sold back to its lender Friday for $2.6 million in a substitute trustees’ sale. The buyer was The Bank of New York Mellon Trust Co. NA.
With only one 2,500-square-foot vacant space out of seven, the center is 79.8 percent occupied. Its largest tenants are Cash Quick Inc. and Gold Discount of St. Louis Inc., according to the most recent rent roll.
The owners of The Shops at Rock Creek, Kapree Rock Creek LLC and Memphis Rock Creek LLC, defaulted on an $11.7 million loan dated Nov. 9, 2006. The owner of Cordova Station South, Kapree Germantown LLC, defaulted on a $1.9 million loan dated Aug. 1, 2005.
And owner of The Shoppes at Misty Meadows, FOR 1031 Shoppes at Misty Meadows LLC, along with DBSI Shoppes at Misty Meadows LeaseCO LLC, defaulted on a $5.1 million loan dated Jan. 25, 2007.
“When the loans went into default, the loans were transferred to us for servicing, and that’s when we headed down the path of foreclosure,” said Laura Thorpe of Centerline’s REO (real estate owned) department.
R. Spencer Clift III of Baker, Donelson, Bearman, Caldwell & Berkowitz PC served as successor trustee for all three properties. He pointed out that they each went into receivership earlier this year, and that the arrival of Colliers Wilkinson Snowden provides a good opportunity for turning them around.
“They’ll do what they can to market, sell and maximize recovery for that trust,” Clift said. “Those have been in receivership for a while.”