By Jon Peterson
Park City, Utah-based PECO Real Estate Partners has placed under contact the Everett Mall in Everett as a potential acquisition in the future.
“It’s our intention that we would like to acquire the property sometime in the next 30 to 45 days,” said Mike Phillips, president of PECO Real Estate.
This transaction, should it occur, would be the first investment of $300 million of capital that PECO has received from New York City-based Almanac Realty Investors. This equity investment will be used as growth capital as PECO looks to grow its acquisition efforts over the next several years. PECO is hoping to complete $1 billion worth of retail transactions over the time frame. This will be accomplished by having a leverage component in the range of 65 percent on a loan-to-value basis
The total number of properties that PECO will be buying going forward will be from 8 to 12 assets. “Our investment strategy will be focused on three types of retail. These would be a mixture of lifestyle retail, power shopping centers and B-/C+ level malls. All of the properties that we buy will have a value-add component that we can work on improving going forward,” said Phillips.
The targeted returns on the transactions will be a gross IRR of 15 percent. PECO will be looking for assets located in the Mountain/West states, Mid-Atlantic and the Midwest.
Almanac made its investment with PECO for its commingled fund, Almanac Realty Securities VII. For this commingled fund, the real estate manager raised $1.4 billion of equity capital. This capital raise was concluded in June 2015. Among its investors were Teacher Retirement System of Texas and Pennsylvania Public School Employees Retirement System.
There is no leverage placed on the commingled fund. The targeted returns are a 12 percent to 14 percent net IRR. Almanac has made a total of five investments to provide growth capital for real estate operating companies and one mortgage REIT. At least one of these companies has a presence in Seattle. This is San Diego-based Westcore Properties, which invests in office and industrial assets along the West Coast.