Stratus sells HEB-anchored retail center in $114M deal
Stratus Properties Inc., the Austin-based real estate, entertainment and hospitality company, has inked a blockbuster deal to sell its new HEB Grocery Co.-anchored retail development in Lakeway for $114 million. The purchase agreement was announced Tuesday morning in a regulatory filing.
The buyer of the Oaks at Lakeway is TA Realty LLC, a private real estate investment company headquartered in Boston with offices on the West Coast. The deal is expected to close Dec. 15.
Stratus Chairman, CEO and President Beau Armstrong said the sales process has been the most robust he's ever experienced. Stratus also owns the W Hotel, ACL Live at the Moody Theater and other commercial space in what is called Block 21 at Lavaca and Second streets.
"This is the strongest [deal] I've worked on in terms of demand," Armstrong told Austin Business Journal.
The rapid growth of affluent Lakeway and lack of inventory in that area has driven demand sky high.
"That's what made this deal so attractive," Armstrong said.
The price point is an eye-opener for a neighborhood shopping center, but there are some conditions that must be met. Stratus is on the hook to complete leasing of the remaining vacant space — about 20,000 square feet in existing structures and four pads earmarked for single-tenant development. It also is responsible for the development of a hotel pad, but a deal already has been signed with an developer affiliated with La Quinta Inns & Suites.
"They're going through the city process right now," Armstrong said.
HEB must also agree to an amendment to its lease, though the specifics of that change are not outlined in the U.S. Securities and Exchange Commission filing.
The terms of sale are not that uncommon, Armstrong said, given that Stratus has actively leased the property and has established momentum in that pursuit. Retail broker veteran Bryan Dabbs, who started his own firm BKD Realty, is handling the retail brokerage.
As stated in the SEC filing, Stratus will be obligated to pay TA Realty increments starting at $132,445 per month to cover the vacant space, but that amount will decline with each lease signed. Stratus projects complete lease-up by December 2018.