Brian Harper’s New York-based RPT Realty made at least $5 million in a $35 million sale of a Chicago-area shopping center to LBX Investments.
California-based LBX, led by managing partners Philip Block and Robert Levy, bought the 228,000-square-foot Mount Prospect Plaza at 940-1100 East Rand Road for $34.6 million from RPT Realty, whose CEO and president is Harper, Cook County records show.
CBRE’s Christian Williams, who represented RPT, said the deal underscores that there is demand for strong assets throughout the Chicago area.
“RPT is looking at exposure to various markets and where they see potential for rent growth and occupancy growth,” Williams said of the publicly traded real estate investment trust.
Though RPT bought the property in 2013 for $36.1 million, the most recent sale did not include the Walgreens National Data Center, which is located in the shopping center and was sold for $6.2 million in 2017. The shopping center also had an 85 percent occupancy rate in 2013 that has gone up to 95 percent, according to Williams.
“I think there’s still good growth in leasing up the remaining space there,” he said.
It’s a win for RPT after a couple of losses on Chicago-area shopping centers over the past year. The firm took a hit on a December sale of a 135,000-square-foot shopping center in Chicago’s Lincoln Park neighborhood. It had bought that property, called Webster Place, for more than $52 million in 2017 and then sold it for $29 million after scrapping a redevelopment plan for the asset.
The shopping center is the 14th addition to LBX’s portfolio and the commercial real estate investment firm’s second acquisition in the Chicago area. LBX picked up the 225,000-square-foot Evergreen Plaza shopping center in Evergreen Park for $67 million in 2021, marking last year’s largest retail deal at the time of the October sale.
The market has since gained steam, with investors pouring more cash into retail assets leased to merchants selling what are being called daily needs properties. New York-based Brixmor has made especially big retail wagers in the Chicago area, spending more than $160 million this year to buy three different grocery-anchored shopping centers, including one deal for two properties for $130 million.
Mount Prospect Plaza has a Walmart Supercenter as a shadow anchor and grocery store ALDI, Marshalls, Ross Dress For Less, Burlington and LA Fitness as anchors.
The purchase by LBX shows investors are still hungry for grocery-anchored shopping centers in suburban Chicago, as it comes on the heels of the $30.5 million sale of the Thatcher Woods Center in River Grove to Florida’s East Coast Acquisitions and Allied Development’s purchase of the Marshfield Plaza shopping strip on the city’s South Side for $30.2 million.
Grocery-anchored shopping centers comprised more than one-third of retail transaction volumes nationwide in the first quarter, according to JLL. Trades of grocery-anchored assets hit a record high of 735 in 2021, up 13 from the previous record set in 2014. Companies spent over $13.3 billion on the properties, the largest share of any retail property type and the second-most in recorded history.
While shopping center prices have increased, profit margins and cap rates, a measure of rental income a property generates compared with its purchase price, have dropped.
Williams and CBRE colleague George Good have another area shopping center, the Gateway Centre at 7507 North Clark Street in Chicago’s Rogers Park neighborhood, under contract. The buyer and seller are unknown and Williams declined to comment.