DDR Corp Buys Tucson Shopping Center for $125.4M

By Gail Kalinoski, Contributing Editor

DDR Corp. has added a 709,811-square-foot Arizona open-air power center to its purchases this year, closing Wednesday on the $125.4 million acquisition of the Tucson Spectrum Shopping Center.

The Ohio-based REIT bought both Phase I and Phase II of the regional retail center located off Irvington Road and Interstate 19 from an affiliate of the Phoenix-based Barclay Group and Creswin Properties, Inc., a Canadian real estate company. Including Target and Home Depot, which both own their land and buildings, Tucson Spectrum encompasses more than 1 million square feet of retail space on 122 acres. Tenants include JC Penney, PetSmart, Ross, Marshalls, Michaels, PayLess, Famous Footwear, Dollar Tree, Best Buy, Old Navy, Bed, Bath & Beyond, Harkins Theaters, Red Lobster, Starbucks, McDonalds and LA Fitness.

The site also has a grocery anchor, Food City, which is part of the family-owned, Arizona-based Bashas’ chain, according to Patrick Dempsey, a principal in Lee & Associates. Dempsey and Jan Fincham, also a partner and investment broker at the firm’s Phoenix office, represented the seller and procured the buyer.

“There was extreme interest in the property because of how well the retailers do at this site,” Dempsey told Commercial Property Executive. “It was a very sought-after Class A asset.”

“The Tucson Spectrum is one of the largest and most successful open-air retail power shopping centers in the Western United States and serves Tucson, southern Arizona and northern Mexico,” added Fincham. “Many of the tenants in the Tucson Spectrum have some of the highest sales volumes in the country for their stores.”

Dempsey said the site was also attractive to prospective buyers because it has seven developable finished retail pads. “That allowed for someone to develop some more upside,” he added.

Dempsey said there had been some thought given to selling the two phases of Tucson Spectrum separately.

“It was considered at first, but really the strongest buyers wanted the entire project,” he added.

Phase I was finished in 2001 and Phase II was completed in 2008.

“Our partners, relationships, and company’s dedication were essential in creating this institutional quality asset. With the stabilization of the center and the improvement in market conditions, it proved to be an opportune time to sell,” said Scott T. Archer, managing director of Barclay Group. “With DDR’s reputation and proven track record, they provide a natural fit to ensure the future success of Tucson Spectrum.”

DDR has been aggressive during the first part of this year, most notably teaming up with the Blackstone Group’s flagship real estate fund on a $1.4-billion joint-venture purchase of 46 shopping centers from EPN Group. DDR contributed $17 million of common equity and $150 million of preferred equity to the JV that closed in June. It also assumed a pro rate share of the JV debt of $48 million. The deal calls for DDR, owner and manager of 469 shopping centers, to continue to provide leasing and management services at the properties and gives it right of first refusal to acquire 10 of the assets. In April, DDR fully acquired Portland’s Tanasbourne Town Center and Phoenix’s Arrowhead Crossing by buying out its partner DRA Advisors, Inc. for $70 million.