The trustees for the Arkansas Teacher Retirement System on Thursday authorized the sale of the system-owned Southcenter Shopping Center in Hot Springs for $12.75 million.
“Sell it,” board Chairman Richard Abernathy declared after system Executive Director George Hopkins said the system could either sell the shopping center or hold onto a good asset.
Hopkins said Akard Acquisition of Dallas had submitted a letter of intent to purchase the shopping center from the system for $12.75 million. The shopping center’s appraised value is $12.5 million.
“They seem interested,” Hopkins told the trustees before they approved the recommendation of the board’s investment committee to authorize the sale of the shopping center that the system has owned since 2000. “I am assuming they plan to pull the trigger.”
If the sale to Akard Acquisition doesn’t close, the resolution that the board of trustees approved Thursday authorizes the system to sell the shopping center for $12.75 million to someone else, Hopkins said.
The shopping center is located on Central Avenue near the Hot Springs Mall.
The system has investments valued at more than $14 billion and more than 100,000 working and retired members.
Kroger and Kmart were dual anchors in the shopping center in 2000 before Kmart announced in 2003 that it was closing the Hot Springs store, the report said. About half of the Kmart space was leased to Hobby Lobby in 2004, but the other half was not leased until 2012 to Ross Dress for Less.
“Larger anchor-type tenants have been difficult to attract to the mall area as anchor store type activity has gravitated to the bypass area of Hot Springs,” the recommendation said. The system and its property manager “have worked hard to strengthen the shopping center and build tenant satisfaction.”
The shopping center “is back to a strong position and is apparently catching the attention of investors looking for smaller retail properties in markets like Hot Springs,” the recommendation said.
Although the system has done nothing to seek offers or suggest the shopping center is for sale, the system has two offers for the shopping center, the recommendation said.
The system received the first offer April 14, and the board’s staff sent a counteroffer to increase the purchase price from $12.6 million to $12.75 million after consulting Abernathy, the report said.
Tuesday, another prospective buyer offered $12 million for the property. System officials will make a “backup” offer, agreeing to sell to the second party for $12.75 million “if for some reason the transaction with the first party fails to close,” the recommendation said.
The system’s staff and Chicago-based consultant Hewitt Ennis Knupp recommended the board’s acceptance of the offer for $12.75 million because “retail shopping centers pose more risk as compared to office leases and have high cyclical volatility,” the recommendation said.
Selling the shopping center now means the anchor leases have multiyear commitments and “this is also a time when many investors are looking for this type of property,” the recommendation said.
Arkansas, Pages 10 on 04/25/2014