An Atlanta real estate firm has bought most of the Poyner Place shopping center in North Raleigh for $18.15 million, which is less than half what a pension fund paid for the same property five years ago.
The investment is the first in the Triangle by RCG Ventures, a private firm that owns more than 50 retail properties across the country.
The seller was AEW Capital Management, a Boston firm that managed the asset for the Lucent Technologies Inc. Master Pension Trust, according to property records.
The trust paid $46.4 million for the property in December 2005.
RCG purchased about 200,000 square feet of retail space plus four undeveloped parcels that could hold an additional 70,000 square feet.
Existing tenants include Old Navy, Office Max, Pier 1 and Ross. About 50,000 square feet is vacant.
The shopping center is behind Triangle Town Center and next to a Target and a recently opened Walmart.
"You've really got what I call the No.1 and No. 2 [retailers] right next to each other," said Michael McMillen, president and co-founder of RCG. "That kind of solidifies that area and it's only going to get better."
The retail vacancy rate in northeast Raleigh was 7.8 percent in the first half of 2010, slightly below the Triangle rate of 8.1 percent, according to Karnes Research, a Raleigh firm that tracks commercial real estate trends.
Poyner Place was built by Crosland in 2004.
Rapid development
The smaller retail spaces in the center struggled initially, said Brian Reece, a partner with Karnes.
"I just think it's really a visibility issue," he said. "The road network is below it and so it's kind of up top, and if you're not there within the Target area you're not going to see it."
But the entire area is rapidly being redeveloped, including the opening of the Walmart and a Courtyard by Marriott.
There's also considerable land behind Wal-Mart where additional houses or apartments could be built.
"With the connection of Capital Boulevard and Interstate 540 right there, that corridor is definitely on the radar screen for a lot of people," Reece said.
Poyner Place is RCG's second purchase this year, and McMillen said the firm expects to buy $300 million in assets over the next 36 months. Like most investors, RCG expected more distressed retail properties to have come on the market by now.
"I think everybody is waiting on the next shoe to drop," McMillen said.
As for how RCG positioned itself to buy Poyner Place for a fraction of what the seller paid, McMillen said being flexible and having cash were key.
"It was a lot more complicated transaction than it appears on the surface," he said. "I think our track record and our capital position allowed the seller to choose us."
