ATLANTA (June 11, 2014) – Atlanta developer and retail visionary Ben Carter just sold his stake in an upscale Jacksonville mall for a great price. Carter developed St. Johns Town Center and successfully persauded retailers including Apple, Louis Vuitton and soon Nordstrom to take space or build at the superregional mall.
Carter sold his 50 percent ownership stake in St. Johns Town Center to Deutsche Asset and Wealth Management, a unit of Deutsche Bank formerly known as RREEF. (Simon Property Group, the huge REIT, owns the other 50 percent and will continue to lease and manage St. Johns Town Center.)
The price for half of the 1.2 million-square-foot center was more than $375 million, according to The Wall Street Journal.
That's a big number and is emblematic of investors' desire for malls with high occupancy rates and top-notch clients. The transaction highlights Carter's real estate savvy and vision. He built an upscale mall in a secondary market and filled it with primary-market tenants. Then, he sold at the right time. The Wilbert Group is thrilled to be working with him.
Here's more from Robbie Whelan's story in the Journal.
Mr. Carter, who also has property investments in Atlanta and Savannah, Ga., said in an interview he sold his stake in the Jacksonville mall because he wants to focus on different projects. He also said he thought he could get a good price because there are few high-quality, superregional malls on the market.
"My new business strategy is outlet malls and urban development. I don't see a great need in the Southeast for regional malls," Mr. Carter said. "They're not making these assets anymore. There are very few of them in private hands, and the premium assets don't really trade."
St. Johns Town Center had an occupancy rate of 99% and sales of between $650 and $700 a square foot last year, according to Mr. Carter and brokers who worked on the deal.
Deutsche Asset & Wealth Management, formerly known as RREEF, has $47 billion in assets under management in its real-estate investment business and invests in publicly traded real-estate investment trusts, private equity and debt, in addition to making direct property investments across the globe.
In a 2014 strategic outlook report produced by Deutsche in February, the company observed that "the split between the best- and worst-performing shopping centers grows ever wider and seems to be enduring," and said that it prefers to invest in "dominant regional malls and unique retail offerings" such as urban "high street" retail.
Green Street Advisors, a Newport Beach, Calif.-based real-estate research firm, estimates that last year, the highest-quality malls in the country, dubbed "A++" malls, produced $945 in sales a square foot of space. D-malls, the lowest-quality grade, produced $140 a square foot last year. Based on its sales per square foot last year, St. Johns Town Center would fall somewhere between an A and A+-rated mall.
The sale to Deutsche is "a good sign for owners who have this quality of properties in their portfolios," said Daniel Busch, an analyst who covers retail real estate for Green Street. "All the focus recently has been on selling low quality properties, the B malls. That's what's been on the market. These high-end transactions are few and far between. This transaction gives us a lot of confidence that values are holding up at the high end."