After languishing in receivership since the height of the recession in 2009, Tropicana Centre, one of the largest and most prominent power retail centers in Las Vegas, has been sold to a New Jersey-based investment firm for $39.8 million, Colliers International has announced.
Although the sale signals a complete turnaround for the center, which had seen a steady exodus of tenants plunge its occupancy rate to 40 percent over the last five years, it was not until a new receiver was appointed and a team of Colliers retail investment, leasing and property management experts were selected to market the 600,000-square-foot property that its fortunes began to change. The global brokerage firm represented both the buyer, Arilex Realty Corp. of Edgewater, New Jersey and Trident Pacific Realty of Newport Beach, the court-appointed receiver, in the transaction.
“Our first task when we were brought into the center was to make it an investment-worthy asset by stemming the exodus of tenants, filling the empty spaces and determining why current tenants were so resistant to remaining at the center,” said Colliers Senior Vice President Christopher Maling, a veteran retail properties specialist a member of the team of four brokers and a property manager from the firm’s Las Vegas and Los Angeles offices. “We were surprised to discover that the previous brokerage team had not spoken to either Walmart or Sam’s Club, the two primary drivers of consumer traffic to the center, about renewing their soon-to-be expiring leases.”
Key team members from the firm’s Las Vegas office were Senior Vice President Frank Marretti and Vice President Joe Bonifatto, who led the center’s renewed and aggressive leasing efforts, as well as Jennifer Kennedy, who provided a steady and experienced hand for property management responsibilities.
Sharing responsibilities on that team, in addition to Christopher Maling on the retail investment side, was his partner and brother, Senior Vice President David Maling, both based in the firm’s Los Angeles office.
According to Bonifatto, the Colliers team immediately began negotiations with both Walmart and Sam’s Club to bring their lease costs to market levels, which resulted in Walmart extending its lease for 15 years and Sam’s Club signing a 10-year lease extension. With that problem solved, the team moved on to begin aggressively leasing the empty space and to provide reliable property management, which included winning concessions from the receiver to undertake some upgrades that improved the parking lots, landscaping and cosmetic changes that made it even more attractive to prospective tenants.
“As a result of our leasing team’s efforts over the past year, occupancy jumped to more than 80 percent and the center was once more a destination shopping facility where consumers could shop for and purchase everything from groceries to name-brand merchandise in every retail category,” said Colliers Managing Partner Mike Mixer, who oversees the firm’s operations in Las Vegas. “Once Walmart and Sam’s Club were onboard, tenants not only were extending their own leases, but it became easier to fill the vacant space. Very few retailers drive consumer traffic to a power center like a Walmart or a Sam’s Club and we have both.”
“This is a perfect example of how Colliers’ national presence can draw upon its regional and local experts to effect the best outcome for our clients,” added Executive Managing Director Hans Mumper, who leads the firm’s operations in Los Angeles. “After winning the assignment, our first decision was to assemble a team that could analyze local market conditions by asking the right questions and then determine the best path forward to reach the ultimate objective of selling this highly visible center at a price that reflected its true value.”
But that was not the end of the story, noted Colliers’ Christopher Maling, only the beginning. What the team had accomplished to that point was to meet the challenge given to it by the new receiver – create an investor-worthy asset. Now it was time to complete the assignment and sell it out of receivership. Prior to the Colliers team’s efforts, representatives of the previous receiver had been trying to sell the asset as it was, but the few offers that were submitted were far below the true value of the center, according to Maling.
“Once the center was back to nearly full occupancy, property upgrades completed, and tenants had a responsive property manager to rely on, it was time to seek a buyer through the sales process,” said Boniffato. “The receiver set aside a period of about 45 days for potential buyers to submit offers. We received some 24 offers, seven of which met or exceeded our minimum pricing requirement, and the final offer was in excess of $39 million from Ariliex.”
In addition to Walmart and Sam’s Club, the center, which sits on almost 60 acres at the highly-trafficked intersection of South Pecos Road and East Tropicana Avenue, boasts a broad range of national credit tenants, including a drive-through McDonalds, Sprouts Fresh Market, GameStop, KFC, Dollar Tree, and Radio Shack, among a variety of others.