Arrow Operating Acquisitions Purchases 700 KSF Suburban Chicago Retail Asset

By Barbra Murray, Contributing Editor

Arrow Operating Acquisitions has just purchased The Streets of Woodfield, a 700,000-square-foot shopping center in Schaumburg, Ill., and the company was able to secure a $100 million loan to seal the $118 million deal. Arrow acquired the suburban Chicago asset from KF Schaumburg L.L.C., a joint venture in which Kimco Realty Corp. owned a 45 percent stake.

Commercial real estate and capital markets services HFF did double duty on the transaction, marketing The Streets on behalf of the seller and orchestrating financing for the buyer, which grabbed the asset without assuming any existing debt.

Located approximately 25 miles northwest of Chicago at 201 N. Martingale Road, The Streets first opened its doors in 1991 and has since undergone a series of redevelopments, including a 2010 expansion that made room for two of the property’s anchors, Crate & Barrel and Whole Foods Market. Today, the shopping center’s tenant roster, which also includes two other anchors, is 98 percent full.

The property’s high occupancy level is due in no small part to its coveted premier location amid a substantial amount of shopper traffic. The Streets sits across from the 2.2 million-square-foot Woodfield Mall and, as HFF described in the offering memo, “operates on a fully integrated synergistic basis with the mall.” And the asset offers potential upside with the option for development of additional pad sites at the 43-acre location.

HFF was able to arrange Arrow’s sizable financing deal through CIBC World Markets Inc., which provided a four-year, adjustable-rate acquisition loan. While the multi-family sector continues to reign supreme in the real estate capital markets, retail made a gradual move up the list last year and continues to gain favor among lenders. “Retail loans advanced at a slightly slower but still strong pace of 51 percent last year, however, some caution remains,” a report by Marcus & Millichap Real Estate Investment Services Inc. noted. “Retail lenders will continue to mitigate risk by mandating strong sponsorship, a successful track record with retail, markets with proven tenant interest and need, and stabilized cash flow.”

Property owners, REITs in particular, are also getting that warm and fuzzy feeling from the capital markets when it comes to major financing packages. Inland Western Retail Real Estate Trust on closed a new $650 million unsecured credit facility two months ago and more recently, Kimco, also a retail REIT, obtained a $400 million unsecured term loan.