Key Takeaways
- • Las Palmas Marketplace in El Paso valued at approximately $138.4 million in a portfolio sale, representing a $54 million gain from its 2010 purchase price and a $66 million premium over its current tax appraisal.
- • Blackstone-managed investment fund acquiring 49-property portfolio for $1.9 billion, with Las Palmas identified as the second-largest asset in the Texas and Northeastern U.S. shopping center collection being divested by Toronto-based RioCan Real Estate Investment Trust.
- • Transaction expected to close by April 30, 2016, driven by RioCan's strategic pivot to reduce debt and concentrate capital on Canadian growth initiatives, as announced in December 2015.
- • Las Palmas commands strong retail fundamentals with 51 tenants, anchored by Kohl's, Lowe's, and a separately-owned 20-screen Cinemark theater (opened 1997), positioning it as El Paso's second-largest shopping center at 638,000 square feet.
- • Low interest rate environment and robust sales performance at Las Palmas justified the elevated valuation, according to original developer Artemio De La Vega, reflecting continued investor appetite for well-performing retail assets despite economic uncertainty.
Summary
Las Palmas Marketplace, one of El Paso's premier retail destinations, is changing hands as part of a major $1.9 billion portfolio transaction in which Toronto-based REIT RioCan Real Estate Investment Trust is divesting 49 shopping centers across Texas and the Northeastern United States. The buyer is a newly formed investment fund managed by Blackstone Group, the New York-based firm widely recognized as the world's largest real estate investor. The transaction is expected to close by April 30, 2016.
The Las Palmas property is valued at approximately $138.4 million according to a New York real estate data firm, representing a significant appreciation trajectory. The center sold for $84.4 million in 2010 and carries a tax appraisal of approximately $72 million, making the current sale price a $54 million gain from the prior transaction and a $66 million premium over assessed value. At 638,000 square feet, Las Palmas ranks as the second-largest asset in RioCan's divested portfolio and El Paso's second-largest shopping center, trailing only Cielo Vista's 1 million-plus square feet of retail space.
The center's investment appeal rests on demonstrated operational strength. Las Palmas houses 51 retailers and a diverse restaurant portfolio, anchored by department store tenant Kohl's, home improvement retailer Lowe's, and a separately-owned 20-screen Cinemark theater. The theater, which opened in 1997 as the center's first tenant, became instrumental in establishing the property's market position and drawing additional retailers. Originally developed by Artemio De La Vega in the late 1990s and early 2000s at the Interstate 10 and George Dieter Drive location on El Paso's East Side, Las Palmas has maintained consistent sales performance that De La Vega attributes to "a lot of (investment) money out there" and "low" interest rates supporting valuations.
RioCan's decision to divest the U.S. portfolio reflects the REIT's strategic reorientation toward debt reduction and focused growth in Canadian operations. The portfolio sale enables the company to monetize its U.S. retail holdings while maintaining exposure to the North American market through Blackstone's institutional capital structure. For Blackstone, the acquisition adds significant diversified retail assets to an already substantial U.S. shopping center portfolio.
The Las Palmas property is valued at approximately $138.4 million according to a New York real estate data firm, representing a significant appreciation trajectory. The center sold for $84.4 million in 2010 and carries a tax appraisal of approximately $72 million, making the current sale price a $54 million gain from the prior transaction and a $66 million premium over assessed value. At 638,000 square feet, Las Palmas ranks as the second-largest asset in RioCan's divested portfolio and El Paso's second-largest shopping center, trailing only Cielo Vista's 1 million-plus square feet of retail space.
The center's investment appeal rests on demonstrated operational strength. Las Palmas houses 51 retailers and a diverse restaurant portfolio, anchored by department store tenant Kohl's, home improvement retailer Lowe's, and a separately-owned 20-screen Cinemark theater. The theater, which opened in 1997 as the center's first tenant, became instrumental in establishing the property's market position and drawing additional retailers. Originally developed by Artemio De La Vega in the late 1990s and early 2000s at the Interstate 10 and George Dieter Drive location on El Paso's East Side, Las Palmas has maintained consistent sales performance that De La Vega attributes to "a lot of (investment) money out there" and "low" interest rates supporting valuations.
RioCan's decision to divest the U.S. portfolio reflects the REIT's strategic reorientation toward debt reduction and focused growth in Canadian operations. The portfolio sale enables the company to monetize its U.S. retail holdings while maintaining exposure to the North American market through Blackstone's institutional capital structure. For Blackstone, the acquisition adds significant diversified retail assets to an already substantial U.S. shopping center portfolio.
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