East Norrinton, PA
178,791 Square Foot Community Shopping Center
- Acquired: September 27, 2013
- Anchored by: Big Lots, Aldi, Crunch Fitness, and Savers
- At acquisition, Sears Holdings leased nearly 48% of the center with 84,180 square feet. The space had originally been occupied by Kmart until 2011, when they closed operations. Immediately thereafter, Sears Holdings backfilled half the space with their Sears Outlet concept. With options to renew over the next fifty years at rents grossly below market, Sears seemed unlikely to relinquish their valuable leasehold interest. We underwrote them staying at Dekalb throughout our hold period. A year after our acquisition, it became clear that there might be an opening to take back the space. Sears had been unable to execute a lease with an anchor tenant for the rest of the box despite significant interest from the market. We pursued the prospective anchor tenants directly while simultaneously opening the dialogue with Sears about an early termination. After a long and delicate negotiation, we succeeded in terminating Sears Holdings without paying a fee, kicked out Sears Outlet, and landed two new anchor tenants, Savers and Crunch Fitness, at rents more than double what Sears had been paying. We are still in the process of bringing this center to stabilization, but the end result will be significantly better for our investors.
- Future capital improvements include: new facade for half of the shopping center, new pylon sign, and updated site work.