LOUISVILLE—P&P has just sold the Bluegrass Manor Shopping Center, a grocery-anchored development in St. Matthews, KY, part of the Louisville metro area, for $46.1 million to a partnership led by a local operating partner, the Hocker Group.
Grocery-anchored centers have become some of the most desirable retail properties, but this property had special appeal because it features a Whole Foods, currently the only one in Louisville. The property closed at a cap rate of 6.65%, which exceeded market expectations for a leasehold interest in an anchored center in Kentucky, according to officials from Faris Lee Investments, which advised both parties in the transaction.
“Faris Lee marketed the asset as a rare opportunity to acquire a quality grocery-anchored center with high-performing tenant sales in an irreplaceable location,” says Rick Chichester, president and chief executive officer of Irvine, CA-based Faris Lee. “We also marketed the center with some future lift in income based on certain below-market rents, an outparcel with development potential, and at some point in the future the possibility of redevelopment of portions of the property to accommodate higher and better uses.”
Bluegrass’ tenant lineup also includes Toys R Us and LA Fitness. And although St. Matthews is already considered one of the top retail areas in the region, Donald MacLellan, senior managing partner of Faris Lee, says the Whole Foods heightened the interest because it draws customers from a huge radius and has experienced tremendous store sales with strong annual growth.
“Ultimately, Faris Lee garnered several strong offers on Bluegrass Manor from a diverse mix of investors including institutional owners, REITs, and private investors,” he adds. “We exceeded the seller’s expectation for pricing and identified an experienced local operator who realized the current value as well as potential future value to be realized.”
Faris Lee has completed two other grocery-anchored center transactions over the last 30 days. The other two sales include the $29.35 million sale of Rosedale Village, a 222,000 square-foot community center located in Bakersfield, CA, and the $15 million sale of Payson Village Center in Payson, AZ.