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Calif.-based REIT buys West Broad Village

Michael Schwartz October 22, 2012 0

A fast-growing mixed-use development at Short Pump was just sold for more than $150 million.

Hit hard for a time by the recession, the now bustling West Broad Village was sold by its developer Unicorp for $161 million to Excel Trust, a REIT from San Diego. The deal did not include townhouses or townhouse lots.

Florida-based Unicorp, which conceived and developed the 161-acre property in 2008, also sold five of its other shopping centers to Excel for a total purchase price of $262.8 million.

Unicorp President Chuck Whittall on Friday confirmed the closing of the deal. He said the sale allows Unicorp to shed the debt it had on West Broad Village. He would not share the amount of the final proceeds on the property.

“We’re glad to have made the sale and retire the debt,” Whittall said by phone Friday. “The project is in great hands. They are going to carry forward our vision on the project.”

For its $161 million, Excel purchased 386,000 square feet of retail and commercial space at the development, along with the 339-unit apartment complex known as the Flats at West Broad Village. The commercial space includes outparcel properties occupied by retailers REI, Whole Foods, HomeGoods and others, and restaurants such as Bonefish Grill, Mimi’s Kitchen, and the soon-to-be-built Carrabba’s and Chuy’s.

Excel said in a release late Friday that the retail portion it purchased is approximately 80 percent leased with another 35,000 square feet yet to be built. The apartments are 98 percent leased, it said.

Excel’s purchase did not include the Aloft Hotel and its ground floor retail space or the 62,000-square-foot ACAC fitness center under construction. The 135-room Aloft was recently purchased by local hotel owner Shamin Hotels.

The deal also did not include the townhouse section of the development where Eagle Construction and Ryan Homes continue to build.

Unicorp put the apartments on the market late last year. BizSense reported in August that Unicorp’s portion of the property was under contract. Unicorp did not disclose who the buyer was at the time.

“We’ve been under contract with Excel for quite some time,” Whittall said. “It was a big deal, so there was a lot of paperwork and a lot of stuff to understand.”

The apartments were listed with Drew White, Mike Marshall, Wink Ewing and Ryan Ogden from real estate firm ARA.

Drew White said there was great interest in the apartments alone. But Excel became interested in buying the whole package.

“It was a longer process than typical, only because the highly complex nature of the numerous components,” White said.

Whittall said Excel plans on investing more capital in the project to improve the landscaping and eventually to find tenants for two remaining vacant outparcels, one in the middle of the project and one on the west side.

The sale marks a drastic change of fate for a project that was flailing when the recession hammered commercial real estate.

“We always planned on this not being a long-term hold for us,” Whittall said. “We never planned on the recession happening. That was a bump in the road for us. But we successfully made it over that bump. We consider the project to be a success.”

That success did not come without some local help.

The massive townhouse residential piece of West Broad Village is controlled by Markel | Eagle Partners, a local private equity fund that in 2009 threw a cash lifeline to the project when it was on the brink of collapse.

The Markel | Eagle fund, Eagle Construction and NAI Eagle are all part of the Eagle Companies. In addition to taking control of the residential piece, Eagle took over marketing and management of the retail, office and restaurant space for Unicorp.

“Eagle was instrumental for us, and we are grateful for everything Eagle did with us,” Whittall said.

Markel Eagle head Bryan Kornblau said NAI Eagle will continue to manage the retail and commercial portions of West Broad Village for the new owner.

The fund also retains some key real estate on the property.

“Markel Eagle will maintain ownership and control of all for-sale residential products,” Kornblau said. “Also we have two very valuable commercial assets: the pad site next to REI and the so-called tower site at the eastern end of West Broad Village.”

One option for West Broad Village is to put an office tower on the property, he said.

Kornblau said Excel has the financial firepower to make improvements and finish the project the right way.

“Chuck Whittall has done everything in his power with his resources to keep West Broad Village alive, but he hasn’t really been able to take advantage of the market due to some constraints,” Kornblau said. “There is no question that Excel has the resources to bring it across the finish line.”

Kornblau said Excel was planning to set up an East Coast operation oriented around West Broad Village, meaning the REIT could be a player in the Richmond market in the future.

Messages left for Excel executives were not returned by press time.

The other Unicorp properties purchased by Excel as part of the deal are five shopping centers in Orange County, Fla.

The $262.8 million total price was made up of $195.3 million in cash, $5.5 million in the form of units in Excel and $62 million in assumed debt, according to Excel’s release.

Excel’s executive roster includes a senior vice president by the name of Matt Romney, son of presidential hopeful Mitt Romney.

BizSense reporter David Larter contributed to this report.

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