Crossroads Town Center Phase 1 & 2, Gilbert AZ:

Acquired one of three corners developed by Vestar to add 1.6 million square feet just south of the new overpass of the 202 Fwy over Gilbert Rd. Portfolio impacts to many of the power centers developed and held by Vestar in Metro Phoenix put them in a vulnerable position with heavy vacancies of anchors reaching Co-Tenancy Clause tipping points and the potential for catastrophic failures in their portfolio.  The subject had a 80K sf Mervyns build-to-suit done at $5.75 psf NNN that they ultimately bought back from the bankrupt tenant only to release the space at $6 psf NNN, and were forced to cut the 28K sf TJ Maxx Rent from $13.50 psf NNN to $6.50 psf NNN. The Danny’s Car wash encumbered over 100,000 sf of land on the corner, over twice what a typical operator would use and this operator with 9 units in Metro Phoenix was facing bankruptcy. One of the largest Pollo Loco franchises owned the unit at the subject and had closed another unit in the market and defaulted on its rent. Fully 110,000 of the 147,000 sf being acquired was at ostensibly half rents setting the investment up for a doubling of value when the market recovered. We acquired this shopping center that was designed for 190,000 sf at build out and then put the 8.6 Acres of Office Zoned land to the south of it under contract to rezone to retail and ultimately convert the subject into 250,000 sf regional shopping center that would be sought after by billion dollar institutional buyers in the future.