Costa Mesa, Calif.-based Donahue Schriber has quickly allocated $110 million of the $200 million in equity it received in November of 2017 from J.P. Morgan Asset Management and New York State Teachers’ Retirement System. The company this week purchased two retail centers, one in Gig Harbor and another in Covington for a combined price of $110,403,931, according to public records in Pierce and King counties. The seller of both properties was Newport Beach, Calif.-based Terramar Retail Centers, which has been disposing of assets in the region over the last six months.
The property in Gig Harbor, located at 4831 Point Fosdick Dr. NW, is the Point Fosdick Square, a 183,898 square-foot retail property that is anchored by Safeway, Kohl’s and Michael’s, among other retailers. Donahue Schriber paid $68,113,631, or just over $370 per square foot for the property.
In Covington, the company paid $42,290,300, or $279 per square foot, to acquire the 151,563 square-foot Covington Square Shopping Center located at 17023 SE 272nd Street. This retail center is also anchored by Safeway, and other retailers include Rite Aid, Pier 1 Imports and Dollar Tree.
The south King County community of Covington got into the news last year as the city elders approved a massive, 214-acre mixed-use development expected to exceed $670 million in development cost. But also, being in King County, next to Kent and about as far from SeaTac airport as Bellevue, clearly had some appeal for the buyer.
Pat Donahue, Donahue Schriber’s Chairman & CEO, stated “The acquisition of these Washington State assets presented Donahue Schriber with the unique opportunity to expand our presence in a marketplace with high barriers to entry. These core, core-plus, value add, and development opportunities serve the exceptionally strong Puget Sound demographic and will seamlessly align with our company’s West Coast expansion strategy. Donahue Schriber will now concentrate on enhancing the portfolio’s already robust tenancy.”
The seller, Terramar or TRC Retail, is a company that owns, develops and operates shopping centers across the Western U.S. The company recently sold another retail center in January of this year to Bethesda, Maryland-based First Washington Realty. This was the 214,834 square-foot Fairwood Shopping Center in Renton for which Terramar received $77.5 million.
According to Terramar’s web site, both locations have strong demographics for their locations. In Gig Harbor, the company sees a population over 86,000 in a 5-mile radius with an average household income just over $87,000 ($96,762 if only three miles are considered). In this area, Terramar sees a workplace population of just under 40,000 people.
In Covington, the numbers are even stronger. The 5-mile radius encompasses a population of 160,000 people with an average household income of $92,650. Closer proximity of 3 miles bumps that income to $102,764. The workplace population within the 5-mile radius is at 68,012.
Yet, perhaps the most impressive aspect of the Covington location is the opportunity that future developments in the neighborhood bring. The city of Covington approved the development of the 214-acre mixed-use development LakePointe Urban Village last year, which is looking to bring 850,000 square feet of mixed uses in a regional, lifestyle center, a 130-key hotel, up to 1,500 single-family homes and multifamily residences, a 20-acre lake and open space and trails. This new community will be located at Highway 18 and Southeast 256th Street, approximately 30 miles from Seattle. LakePointe is a joint venture between Oakpointe Communities and Presidio Residential Capital. KTGY Architecture + Planning is the master planner and designer. Groundbreaking is expected to begin in 2018.
Donahue Schriber has been an active owner/developer on the West Coast, focusing primarily on the California market. One of its recent acquisitions has been the Progress Ridge TownSquare, a 213,849 square-foot shopping center in Beaverton, Ore. Its investment strategy includes acquiring anchored centers with a minimum GLA of 75,000 square feet and a minimum value of $15 million, according to the company’s web site. The company is interested in anchored retail centers, including neighborhood, community and power centers, with a preference for grocery-anchored projects.
In November of 2017, the company received a $200 million equity investment from institutional investors advised by J.P. Morgan Asset Management and from New York State Teachers’ Retirement System (NYSTRS). Each has provided $100 million in capital planned to fund acquisitions and redevelopments focused on grocery-anchored shopping centers in high barrier to entry markets from San Diego to Seattle.
A request for comment from Donahue Schriber was not received in time of this publishing.