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WPCNR MAIN STREET JOURNAL By John F. Bailey. October 10, 2012 UPDATED 9:43 A.M. EDT: NEW EDITION UPDATE 3:22 P.M. E.DT. UPDATED October 11, 2012:
Developer Louis R. Cappelli has sold his company’s majority interest in City Center in downtown White Plains to a real estate investment trust based in suburban Chicago, while retaining a minority interest, a CB Richard Ellis spokesperson told WPCNR.
The buyer is identified as Inland Diversified Real Estate Trust, Inc., of Chicago.
Alyson Leiter of Great Ink Communications, speaking for CB Richard Ellis, said in a statement to WPCNR,
"Basically, Mr. Cappelli sold his majority interest in the property to Inland, but he still retains a minority interest (in the form of two subsidiaries, White Plains Retail L.L.C. and White Plains Recreation LLC, each an affiliate of Cappelli Enterprises).
"The new joint venture ownership of Inland (majority interest) and Cappelli (minority interest) valued the City Center at $166.4 Million. The sales price isn't disclosed in the press release.
Since Mr. Cappelli is still the minority holder, I assume the City Center Parking Garage is still owned by him, But I am confirming this."
Thursday morning, John Callahan, the White Plains city Corporation Counsel in a written statement to WPCNR, wrote "Nothing relating to the ownership or operation of the garage has changed."
The terms of the transaction according to the Form 8-K filing with the Securities and Exchange Commission are very complex. Inland Diversified has taken out a $99 Million loan from Bank of America (cash proceeds of $87 Million) and $42.4 Million of their own cash. The 8-K reports Inland will use the $139.4 Million to pay off Mr. Cappelli's first mortgage on the property of $124.6 Million, maturing on October 7, 2016, and $4.8 million to repay a second loan Cappelli Enterprises holds from New York State Urban Development Corporation. The remaining $10.4 Million is going to pay "preformation expenditures and closing costs."
The 8-K states that "management of the property will be the sole responsibility of Inland White Plains. Inland Diversified Real Estate Services, LLC has been appointed by Inland White Plains (subsidiary of Inland Diversified)to serve as property manager of the Property and will be paid a 4.5% annual fee."
Complex finanical distributions to the majority and minority partners are described in the 8-K
To view the 8-K go to: http://www.sec.gov/Archives/edgar/data/1438897/000143889712000035/idiv8koct4.htm
City Hall has not answered WPCNR's question as to whether Mr. Cappelli retains the parking garage. The air rights and the New York Sports Club and 24 apartments atop the garage ownership has been sold to Inland according to the CB Richard Ellis news release. (Cappelli Enterprises presently receives revenues from the parking garage up to $600,000 and invests the excess in garage maintenance.)
No connection, but the surprise deal comes after the city of White Plains recently increased assessed value of the complex through to 2019, by $300,000 a year, after the original Payment In Lieu of Taxes Agreement with the city expires in January 2016. The extension of PILOT agreement means that the new buyer and the new minority interest will not be reassessed until the year 2019.
Councilman John Martin is the only city official to comment on whether or not the city knew Mr. Cappelli was in the process of selling majority interest when the city agreed to extend the assessment incrementally beginning in 2016.
Mr. Martin,wrote WPCNR today: I do not believe that the sale was made known at the time we amended the PILOT but also don’t think it would have changed anything. The decision remains valid based on the marketplace for large leasehold space.
The original news release from CB Richard Ellis follows:
Jeffrey Dunne, Steven Bardsley and David Gavin of CBRE Group Inc.’s New York Institutional Group represented LC White Plains Retail, LLC, and LC White Plains Recreation, LLC, affiliated entities of Cappelli Group, Inc., in arranging the joint venture majority interest sale of City Center Retail in White Plains, NY. The team was also responsible for procuring the new joint venture partner, whose parent company is Inland Diversified Real Estate Trust, Inc. The new joint venture valued the center at $166.4 million. City Center is a 381,905± square-foot, grocery-anchored, trophy mixed-use retail and apartment property located in the heart of downtown White Plains. The property is fully leased and anchored by a high profile tenant mix, including ShopRite Supermarkets, Toys ‘R Us (estimated occupancy March 2013), Nordstrom Rack, National Amusements (15-screen theater), Barnes & Noble and New York Sports Club. The Center is shadow-anchored by a 154,241±sq.-ft. Target P-Fresh store, which was not included in the sale. The sale included 99-year air rights over the parking garage, which houses the New York Sports Club and 24 fully leased, in-demand residential apartment units. City Center’s epicenter location, with frontage on Main Street, Martine Avenue and Mamaroneck Avenue, is surrounded by several recently developed apartment and condominium projects totaling more than 1,000 units, including The Residences at the Ritz Carlton and Trump Tower at City Center. With population growth of more than 15% since 2000 within a one-mile radius and average household incomes of nearly $140,000 within five miles, City Center will continue to be a primary shopping and entertainment destination.
Mr. Dunne commented: “City Center will provide the new partnership with stable in-place income due to anchor tenants’ long-term leases, while providing upside through contractual rent increases. The significant foot traffic generated as a result of ShopRite opening last year will be further enhanced by Toys ‘R Us opening at the Center in the spring of 2013.”
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