Landmark Retail Properties, the owner of the Village Shops, Corinth Square and the Fairway Shops has entered into a contract to sell those properties to First Washington Realty, the Bethesda, Mary.,-based real estate company that purchased the Brookside Shops in Kansas City, Mo., earlier this summer — though the sale appears to be contingent on Prairie Village City Council approving reassignment of two Community Improvement District agreements that passed in fall 2010.
Kylie Stock, property manager with Lega-C Properties, which manages all three centers, said the ownership group had not actively marketed the properties, but decided that the unsolicited offer from First Washington was worth pursuing.
“This was a very difficult decision for the ownership group,” Stock said. “It just came down to that we felt the timing of all this worked to our benefit and was going to allow us to be able to focus on internal operations and some other things we’d like to be able to pursue at this time.”
Lega-C met with members of the Prairie Village City Council on Wednesday to apprise them of the situation. The CID agreements for the Village Shops and Corinth Square allow for the reassignment of the rights and obligations of the developer should the property be sold, though reassignment requires council approval. However, the language in the CID agreements essentially requires the council to reassign the CIDs provided the company purchasing the properties is financially able to maintain them. First Washington already manages more than 90 shopping centers in 21 states and the District of Columbia.
Just four of the members of the 12-member council were in office when the Corinth and Village Shops CIDs were approved in September 2011. Of those, three — Steve Noll, Ruth Hopkins and Laura Wassmer — voted in favor of the agreements. The fourth, Andrew Wang, voted against them. However, several of the council members who have been seated since the initial CID agreements passed suggested during their campaigns for office that the terms of the agreement were not as favorable to the city as they could have been. The CIDs raised the sales tax at the Village Shops and Corinth Square by 1 percent for 22 years, with the proceeds going to fund redevelopment and maintenance of the centers. Since being enacted, the CIDS have helped pay for the substantial renovation of Corinth Square, the construction of the new building that now houses Starbucks at the Village Shops, and the reworking of Mission Lane at the Village Shops that is in its finishing stages.
Joshua Brown with First Washington confirmed that the centers were under contract, but said it “would not be appropriate” to comment on whether the deal could close without the council reassigning the CIDs. But Curt Petersen of Polsinelli PC, the law firm representing Landmark Retail Properties in the deal, indicated that the sale was essentially contingent on the council’s approval.
“The reassignment and assumption needs to happen with the transaction,” he said. “That’s how it would work.”
LANE4 Property Group purchased the Village Shops, Corinth Square and the Fairway Shops from Highwoods Properties out of North Carolina in 2009 with financing from an ownership group led by the Consentino family. In December 2012, the owners bought LANE4 out of its stake in the properties, though LANE4 continued to serve at the leasing agent.
Petersen indicated that the reassignment issue was likely to come before the city council around November.
Stock said First Washington has not made a final decision about which entities would handle management and leasing of the centers. It is possible, she said, that Lega-C and LANE4 would be retained to continue in their roles. Otherwise, First Washington could open up its own management and leasing operation in the Kansas City area.
“They will have boots on the ground here to handle all the management on leasing,” she said. “They have no intention of managing these centers from Bethesda.”
Stock said Lega-C and Landmark have been proud of the progress of the centers in recent years, and she thinks the sale would help continue to improve them.
“We’re extremely proud of the success we have achieved in partnership with our tenants, and we think this deal will only enhance the quality of these centers for the public and the experience for tenants,” she said.