Colorado Springs News, Sports & Business

Gazette Premium Content Promenade Shops at Briargate sold; no changes expected

By Wayne Heilman Updated: October 15, 2013 at 11:02 am

A joint venture that includes the nation's largest pension fund has bought the 10-year-old Promenade Shops at Briargate, in a deal that one analyst said represents a big bet on the future growth of the Colorado Springs area.

A limited liability company set up by Institutional Mall Investors, which is a joint venture of the $258 billion California Public Employees' Retirement System and Skokie, Ill.-based Miller Capital Advisory Inc., paid $96.8 million in August for the 231,847-square-foot high-end center at 1885 Briargate Parkway, according to records filed with the El Paso County Clerk & Recorder's Office.

To complete the deal, IMI Colorado Springs LLC assumed a $71.4 million loan, made in 2003 by Morgan Stanley Capital on the center. The loan matures in three years.

The sale should have little effect on the center or its 52 tenants; Poag Shopping Centers Management will continue to manage and lease the center, and the center's three employees were retained after the transaction was completed, said Deanna DeLarge, general manager of the Promenade Shops.

Poag Shopping Centers Management is owned by Poag & McEwen Lifestyle Centers, a Memphis, Tenn.-based developer that built the Promenade Shops and owns, manages or has developed 15 "lifestyle" centers - open-air centers with high-end shops and restaurants.

Paul Turner, president of Turner Commercial Research, a local real estate research firm, said the $417-per-square-foot price paid by IMI shows they are expecting to realize rental rates "approaching $45 per square foot, which I have never seen in this city, but I would expect they are getting close to that."

"It is a good center that gets a lot of traffic and includes one of the top revenue generators of any retail store in the nation - the Apple Store," Turner said.

"This deal shows that there is a lot of interest in the Colorado Springs market and belief that it is recovering."

Besides the Apple Store, the Promenade Shops also includes Banana Republic, Coldwater Creek, J.Jill, Williams-Sonoma, P.F. Chang's China Bistro and Ted's Montana Grill.

Clothing retailer Pendleton opened a store Oct. 4 in the center, and trendy upscale clothing retailer J. Crew is expected to open this year. The center is 96 percent occupied with just three vacant storefronts.

Mark Useman, senior managing director of Sierra Commercial Real Estate Inc., a local commercial brokerage firm, called the center "one of the top retail centers in Colorado Springs with a tenancy like no other."

"Poag & McEwen tells us the tenants generate more than $500 per square foot (per year) in sales," Useman said.

Institutional Mall Investors owns partial or full interests in 25 shopping malls, lifestyle centers and mixed office and retail developments totaling more than 19 million square feet in 15 states, including The Galleria in Houston, the Woodfield Mall in suburban Chicago and the Shops at Mission Viejo in California.

Miller Capital Advisory, started by a former executive with Sears-owned shopping mall development unit Homart, serves as investment manager of IMI and manages assets nationwide valued at about $5.5 billion, mostly "fashion-oriented retail properties," according to the company's website.

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Contact Wayne Heilman: 636-0234 Twitter @wayneheilman

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