By Meghan Hall
Another retail center has traded hands, adding to the narrative surrounding investor interest in grocery-anchored properties. In a deal that closed on February 12th but only recently recorded, San Francisco-based Merlone Geier Partners has sold Shoreline Marketplace for $22.645 million. The buyer, according to property documents, were two limited liability companies affiliated with Merhdad Amanat. Based in Los Angeles, Amanat is a known author of Jewish Identities in Iran.
The Shoreline Marketplace is located at 1201 N. 175th Street. The property totals 56,248 square feet and sits on 6.4 acres of land. According to an offering memorandum obtained by The Registry, the property is 100 percent leased to three-tenant grocery and medical anchor tenants. The tenants, which includes Trader Joes, Mud Bay and The Everett Clinic, are all stable tenants and help make the center an institutional quality, high-credit shopping center.
“The asset is e-commerce, recession and pandemic proof with extremely successful and quality tenants providing a diverse mix of uses,” states the offering memorandum. “Shoreline Marketplace is the dominant asset in the trade area which benefits from a close-in Puget Sound location, growing trade area and future light rail station expansion within 1.5 miles of the site helping to solidify the investment for the foreseeable future.”
The property was fully redeveloped in 2012 and included brand new buildouts for all three tenants. The offering memorandum states that Trader Joe’s stores have the highest sales per square foot for any grocery chains. Owned by Aldi, the company operates 505 stores in 42 states. The Everett Clinic, owned by UnitedHealth Group, has placed significant financial investment into its Shoreline clinic. The company occupies more than 30 locations and UnitedHealth is ranked number seven on the Fortune 500 List. Mud Bay, an employee-owned company, is headquartered in the Pacific Northwest. The company has 58 different locations.
The offering memorandum states that the asset is “e-commerce, recession and pandemic proof,” as grocery and medical concepts have proven to be remain fairly stable in the face of trends caused by COVID-19 and e-commerce. The credit tenants that currently occupy the property make up 93 percent of its income, states the memorandum.
The property will provide the new investor with “immediate” NOI, as all three leases contain 10 percent rental increases every five years, and cap rates for the property are expected to increase by 21 basis points to 5.21 percent by September of 2021. First year NOI is expected to come in at more than $1.166 million.
Additionally, the property’s location—between Interstate 5 and Highway 99—lends itself to commuters. The asset is 10 miles from Seattle’s central business district, 15 miles from downtown Bellevue and 18 miles south of Everett. The average household income within a three-mile radius of the property is $114,000.
Investor appetite for well-located, stabilized retail assets have remained relatively healthy across the Puget Sound, despite the difficulties of 2020. The offering memorandum states that the Shoreline Marketplace was listed for $23.325 million, just a touch more than the official closing price of the recent transaction. However, such transactions serve to bolster the retail market moving ahead and provide confidence to investors, giving the retail sector a much-needed silver lining.