Multiparcel deal at Streets at SouthGlenn closes for $28M

CENTENNIAL – A family real estate office purchased a 127,000 square-foot assemblage of select retail parcels in a redeveloped outdoor shopping center, for $28.08 million as part of a 1031 exchange.

Southglenn Mall LLC acquired the parcels at The Streets at SouthGlenn, situated on the southwest corner of South University Boulevard and East Arapahoe Road, from Southglenn Property Holdings LLC in January, according to Arapahoe County public records. The buyer entity’s New Mexico address listed on the deed is affiliated with The Luzzatto Company Inc., and the seller’s address is affiliated with Greenwood Village-based Alberta Development Partners LLC.

Blue West Capital’s Tom Ethington, Robert Edwards and Noah Harrison represented the seller in the transaction, which consisted of stabilized retail assets, including a Whole Foods Market condo property, a Sephora condo property, an Old Navy anchored Block 4 property, and a high-value stabilized portion of the Block 5 property.

“The Streets at SouthGlenn has demonstrated long-term staying power as a retail destination within the south Denver metro,” Ethington said. “Anchored by Whole Foods Market and supported by consistent traffic, the portfolio offers durable income today long-term upside driven by surrounding density and planned residential growth.”

The Block 4 property features a 57,421-sf retail center. The tenant roster includes Old Navy, Kirkland’s Home Decor, Snöbahn, Heaven Creamery, Indulge Bistro & Wine Bar, Home Team Deli, Bloom Dental, T is for Table, My Music Skool, Tacos & Tequila, and Woodhouse Day Spa.

The Whole Foods Market measures 52,193 sf. The grocery store operates on a double-net lease backed by a corporate guarantee with minimal landlord responsibilities.

The Block 5 asset includes an 11,778-sf open-air center with a weighted average lease term of five or more years. The tenant roster includes Snooze A.M. Eatery, Corner Bakery Café, Floyd’s Barbershop and Huckleberry Roasters. More than 85% of the parcel’s rent roll has operated at The Streets at SouthGlenn for 15 years or more.

The 5,681-sf Sephora retail space features a gross lease backed by a corporate guarantee, offering the potential for future expense savings. The lease includes percentage rent tied to store sales, creating a built-in hedge against inflation.

“There’s still individual private capital and institutional capital interested in retail, but more so in services,” Ethington said. “When you see stuff like Whole Foods and Woodhouse Spas, and nails, food and coffee, all the service-oriented aspects to retail are still alive and well. The parking lots are full to over 4 million visitors per year. It just proves that retail is here to stay.”

Formerly home to Southglenn Mall, the Streets at SouthGlenn was redeveloped into a mixed-use destination with more than 1 million sf of retail, as well as office and residential spaces. Alberta Development Partners led the redevelopment, with construction taking place between 2007 and 2008. The seller had reached the end of its hold period and value-add phase for the parcels and was looking to move on to its next business strategy and take on new projects, Ethington said.

The Streets at SouthGlenn benefits from proximity to major business hubs and affluent communities within 6 miles, including the Denver Tech Center, Highlands Ranch, Cherry Hills Village and Greenwood Village. The new SouthGlenn Master Development Plan outlines pending residential developments that will increase the number of approved residential units in the community from 350 to 1,125; raise the maximum building height for the Sears and Macy’s parcels from 50 to 75 feet; and add 25,000 sf of open space.

The Luzzatto Company Inc. is a family office that invests in real estate and real estate related debt. Its national portfolio includes retail, office, multifamily, industrial, and film and television studio properties. The company has offices in Denver; Los Angeles; Austin, Texas; and Taos, New Mexico. The firm is active in the Colorado market, acquiring several distressed office towers in downtown Denver in the past year.

As featured in CREJ

DEAL TEAM
Tom Ethington, Robert Edwards, and Noah Harrison