New York Investors Stake $44M Claim in Fayetteville

A pair of high-profile shopping centers in Fayetteville’s Uptown retail corridor near the Northwest Arkansas Mall have been sold to a New York investment group for a combined $43.9 million.

DLC Management Corp. of Tarrytown in Westchester County paid $10.4 million for the Kohl’s-anchored Steele Crossing (3533-3595 Shiloh Drive) and $33.5 million for the sprawling Spring Creek Centre (464 E. Joyce Blvd.), which is anchored by Best Buy, T.J. Maxx and Bed Bath & Beyond. It is also “shadow-anchored” by a Walmart Supercenter and The Home Depot.

Combined, the two shopping centers are currently leasing 389,610 SF to 36 tenants.

“We’re very happy,” said DLC Management president and CEO Adam Ifshin. “Those are two really good assets with really terrific retailers for that market.”

The transaction, announced by the company Dec. 4, was part of a privately negotiated portfolio acquisition including 11 retail assets in Arkansas, New York, North Carolina and Tennessee totaling a whopping 2.58 million SF.

1.73 million SF of that total is owned property by other retailers or entities. For example, in the Fayetteville developments, Walmart, The Home Depot and Target are owned by the retailers themselves.

In addition, the 78,000-SF Nelson’s Crossing shopping center, though part of the Spring Creek Centre development, remains owned by Nelson’s Crossing LLC, which lists Tom Muccio as the registered agent.

“But they are still part of the center,” Ifshin explained. “Nobody thinks of Spring Creek as not including the Walmart, but we don’t own that. Walmart owns that. That is the difference in the square-footage calculation.”

The total purchase price of the 11 properties was not disclosed. It was funded, Ifshin said, by a combination of DLC Management partners equity and a loan from Wells Fargo Bank NA.

The acquisition is the largest in the history of DLC Management, which develops, owns, operates and manages community shopping centers throughout the country with an emphasis on urban and infill space.

The privately held company specializes in leasing, acquisitions and property asset and construction management.

It was co-founded in 1991 by Ifshin and his father, company chairman Steve Ifshin, and has grown to manage a portfolio of 115 open-air shopping centers in 29 states with more than 19.1 million SF of retail space.

The seller of both Fayetteville properties, according to real estate records, was a partnership between investment firm The Blackstone Group LP, also of New York, and Ohio-based DDR Corp., a publicly traded company that owns and manages shopping centers. The two companies acquired the Fayetteville properties in June 2012 for a combined $44 million.

Alan Cole, a principal and executive vice president at commercial real estate brokerage firm Colliers International in Bentonville, said the acquisition by DLC Management indicates a strong bet on Fayetteville.

“Spring Creek Centre and Steele Crossing are trophy retail assets in Fayetteville,” he said. “This sale shows that the buyers expect these properties to continue this trend and still have room for upside.”

Other notable tenants of the 588,606-SF Spring Creek Centre, which started development two decades ago under the direction of Little Rock developer Steve Clary, include Old Navy, Ulta Beauty, David’s Bridal and Jo-Ann Fabrics. It has just 8,560 SF available for lease, according to DLC Management.

The 261,665-SF Steele Crossing is also anchored by PetSmart and has Target as a shadow anchor. Other notable tenants including Lane Bryant, Catherine’s and Massage Envy. It has 6,895 SF available for lease.

 

Arkansas Debut

The Fayetteville acquisition marks the company’s entry into the Arkansas market, although Ifshin said the company put in a foreclosure bid for the Shackleford Crossings development in Little Rock in 2011. It ultimately went to Dallas-based Invesco Real Estate for $42 million.

“We liked the asset, but we didn’t like the price it ultimately sold for,” he said. “Story of our lives.”

Ifshin, 49, said that most of his company’s assets that aren’t in major metro areas are in college towns. To underscore the point, he noted that DLC Management owns the largest shopping center in DeKalb, Illinois (Northern Illinois University), and recently completed a major renovation of Fayette Place, located on the major retail corridor of Nicholasville Road near the main entrance to the University of Kentucky in Lexington.

Ifshin, who wrote an undergraduate thesis on economic demography before graduating with honors from Williams (Massachusetts) College, said a university is generally the most stable of economic drivers in a given region.

“Not saying this is going to happen, but if all of a sudden Americans decided they didn’t like chicken as much, Tyson Foods might need to lay a few people off,” he explained. “If truck traffic went down and rail traffic went up, J.B. Hunt may need fewer people. But it’s highly unlikely the university is significantly smaller in the future than it is today.”

“We like those [college] markets and have had a lot of success in them. So when we see a portfolio that has two big assets in Fayetteville, we know that, in my opinion, there is a university there that does great things for the local economy.”

Of the 11 retail properties in DLC Management’s latest acquisition, eight of them are in towns that also have a university.