Lexington Realty Obtains Refi for Connecticut Retail Center

Naugatuck Shopping Center. Image courtesy of Newmark Knight Frank

Lexington Realty International has refinanced the Naugatuck Valley Shopping Center, an approximately 383,000-square-foot retail asset in Waterbury, Conn., in a $29 million transaction. With the assistance of Newmark Knight Frank, Lexington secured the loan from UBS.

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Lexington has owned Naugatuck since 2018 when, acting through affiliate BH Premium Quality Waterbury LLC, it acquired the grocery-anchored shopping center from DDR Corp. for $24.5 million. Located at 950 Wolcott St. near Interstate 81, the property sits in a well-traveled corridor between Boston, Hartford and New York City, and its 98 percent occupancy level speaks to its regional popularity. Tenants at the retail destination include a recently renovated Walmart and a Stop & Shop grocery store and gas station, both of which serve as anchors, in addition to Sprint, Comcast and approximately 15 other retailers.

The financing for Naugatuck came in the form of a fixed-rate loan. “The lending community found the opportunity attractive given the long-term lease in place with Walmart. Stop & Shop also recently renewed their lease and invested its own money into its space, signaling a longer-term commitment to being at the asset,” Jordan Roeschlaub, vice chairman & co-head, of Newmark Knight Frank’s New York Debt & Structured Finance team, told Commercial Property Executive. “The property has also differentiated itself as the best retail center in the market. So, as other centers struggle, this one will thrive.” Roeschlaub and colleagues Dustin Stolly, Nick Scribani and Chris Kramer led the arrangement of the financing. 

Retail rumors run amok

Despite a litany of chain-store bankruptcies, frequent store-closure announcements and cries of an e-commerce-induced retail apocalypse over the last few years, brick-and-mortar stores remain relevant in the U.S., particularly as they evolve to accommodate the changing market. According to the National Retail Federation, nearly all of the top 50 online retailers operate stores, and industrywide, online sales account for just 10 percent of all retail sales. Still, a negative perception of the retail real estate sector lingers.

“Even with all of the positives, lenders still had pause with going to this level of proceeds given the retail headlines,” Roeschlaub said. “However, we were able to strategically navigate the capital markets with close lender relationships to get our client great execution.”