Federal Realty sells Chapel Hill’s longtime shopping center, 2 others in $170M deal
Update: The story was updated at 5 a.m. Jan. 12, 2021, to clarify that Eastgate Crossing is the town’s second-oldest shopping center. The oldest is Glen Lennox, built in 1952.
Chapel Hill’s second-oldest shopping center has a new owner after Federal Realty Investment Trust sold the East Franklin Street property and two other shopping centers for $170 million.
The Shops at Sunset Place in South Miami, Florida, and Sam’s Park and Shop in Washington, D.C., also were sold but to separate buyers.
The Real Deal in South Miami reports that Sunset Place was sold to local developer Midtown Opportunities for $65.5 million — much less than the $110.2 million that Federal Realty paid for the property in 2015.
Sam’s Park and Shop — a historic retail center built in 1931 — was sold for $39 million to Asana Partners, according to the Commercial Observer.
A deed filed with the Orange County Register of Deeds office does not specify a purchase price for Eastgate Crossing in Chapel Hill, but it shows the sale closed on Dec. 23 with KRG Eastgate Chapel Hill LLC. KRG Eastgate was registered on Dec. 10 in Indiana and is affiliated with the Kite Realty Group real-estate investment company.
Eastgate Crossing tenants confirmed Kite Realty was the buyer Thursday afternoon. Kite Realty officials in Apex referred questions to the company’s Indiana headquarters, which did not return calls and emails seeking comment.
The company already has seven North Carolina shopping centers — near Raleigh, Charlotte and Wilmington — in its national portfolio. Federal Realty, which bought the 158,000-square-foot Eastgate Crossing in 1986, does not have any other North Carolina locations in its portfolio.
‘A post COVID retail real estate recovery’
In a news release Thursday, Federal Realty officials said the properties “were not central to the company’s future growth plans.” The deal also comes as Federal Realty repays $250 million in debt due in 2021 and another $250 million due in 2022, as well as $3.1 million in accrued interest, according to the release.
“As the path to a post COVID retail real estate recovery gets a bit clearer, the flexibility afforded by a strong balance sheet has never been more important,” President and Chief Executive Officer Donald Wood said. “We have always understood that our business is a cyclical one yet have always endeavored to de-risk those valleys with the power that only a fortress balance sheet can provide.”
Federal Realty made several improvements to Eastgate Crossing in recent years, including new storefront facades and 7,633 square feet of retail and restaurant space that replaced the former Eastgate BP service station.
Federal Realty also made a number of improvements in 2007 to try and stem the flooding that regularly damages many of its businesses.
Booker Creek runs under the shopping center, which was built in 1958 on farm and wetlands before modern development rules. While the town has talked with Federal Realty about possibly opening up the creek, that plan would require removing roughly 70,000 square feet of commercial space and bridging at least a 70-foot span.
The town now is expanding a natural flood basin between Eastgate and the Village Plaza shopping center on South Elliott Road. That work is expected to reduce the volume of floodwaters rising from Eastgate’s parking lot and give the stormwater time to move more slowly downstream.
Changes in Blue Hill District
Eastgate Crossing is the latest in a line of shopping centers that have been sold in Chapel Hill’s Blue Hill District since 2013, when Regency Centers and a co-investor paid $16.7 million for Village Plaza, which is anchored by Whole Foods.
In 2016, Ram Realty Services paid $17.75 million for the Elliott Square shopping center, also located on South Elliott Road, and in 2017, Austin Sumner Properties paid $21.6 million for Ram’s Plaza, which lies across Fordham Boulevard from Eastgate.
All three properties have been renovate, and two new commercial buildings were added at Ram’s Plaza.
This story was originally published January 8, 2021 at 5:45 AM.
