William Peace University closed on its purchase of the Seaboard Station retail center Monday, and for the first time disclosed how it paid the $20.75 million purchase price.
The university used $10.75 million in cash from its endowment fund, and borrowed $10 million using the retail center as collateral. The money from the endowment amounts to nearly one-third of William Peace’s $33 million endowment.
“This investment in Seaboard Station marks an exciting chapter for Peace,” William Peace President Debra M. Townsley said in a statement. “Seaboard Station is an integral part of the Raleigh community, and it will be an honor to work with this retail center to help it continue to grow and thrive.”
The university has hired TradeMark Properties of Raleigh to take over management of the retail center starting Tuesday. TradeMark also represented William Peace in its negotiations to acquire Seaboard out of bankruptcy.
“The good news is it’s a very stable property with very long-term leases,” said Billie Redmond, TradeMark’s CEO. The tenants, on average, have more than five years remaining on their leases, Redmond said, and most have one or two renewal options.
Seaboard’s 92,000 square feet of space is now 95 percent leased to tenants such as Tyler’s Taproom, O2 Fitness, 18 Seaboard, Ace Hardware and the pet supply store Phydeaux.
William Peace’s acquisition of the property raised concerns among some tenants and neighbors who feared the landlocked university ultimately would move to close the center and use the land for student parking, dormitories or activity fields. The use of a chunk of the school’s endowment also raised alarms among some alumnae who feared school officials were investing too much in a single real estate project.
Redmond said some uncertainty exists for any tenant no matter their landlord. “Any private industry today in a leased space stands to always have the same questions,” she said.
The price William Peace paid for the property means it will require an extended period for the investment to deliver the expected returns, Redmond said. William Peace outbid several other experienced retail operators to put the property under contract.
“I don’t believe that the redevelopment of the existing spaces is going to be on anyone’s list anytime soon,” Redmond said. “And I really believe if it was true for the university, it would be true for any private developer.”
TradeMark plans to make improvements to the signage, landscaping and parking areas, Redmond said, as well as increase efforts to brand the center through additional events and a merchants association.
“They’ve said they wanted this managed in a Class A fashion and want the tenants to be happy,” Redmond said of the university.
Seaboard’s previous owner, Gregory & Parker, filed for bankruptcy in February 2012 after being unable to refinance its loans. The retail center was put up as collateral for loans Gregory & Parker used to invest in numerous properties, and the company’s lenders repeatedly rejected its repayment plans.
Redmond said her firm was hired by William Peace in November to look into buying the property.
“Peace was always the logical buyer; it’s the next-door neighbor,” she said. “… From a long-term perspective, true to what Peace always said, … they had the most to gain and frankly the most value to deliver to Seaboard and the community.”