Thor sets debut deal for retail fund

Real Estate Alert, July 7, 2004

In its first investment, a retail fund operated by Thor Equities has agreed to buy two retail/entertainment centers in Florida from Transwestern Investment for about $120 million.

The properties are the 162,000-square-foot Cocowalk in Coconut Grove, near Miami, and the 101,000-sf Beach Place in Fort Lauderdale. Both have layouts similar to lifestyle centers, but much of the space is leased to bars, restaurants and other entertainment venues, rather than fashion and houseware retailers.

The buzz is that one or two other groups made initial offers for the properties, but no deals ever transpired. If the properties had typical lifestyle-center tenants, they likely would have attracted strong institutional interest. But entertainment tenants are seen as less stable, and institutional money tends to shy away from them.

Thor, a New York-based redevelopment firm run by Joseph Sitt, raised an unspecified amount of equity for its fund, with help from placement agent Credit Suisse First Boston. The vehicle is believed to be targeting investments that provide initial annual yields of 7.5-8.5%. Thor and First Boston declined to comment.

Transwestern, a Chicago advisory firm, hired HI Group to market the two Florida centers last summer. Transwestern acquired both in 2000, paying $60 million for Cocowalk and $35 million for Beach Place.

The three-level Cocowalk, a gathering place for young adults, has a 16-screen AMC Theaters multiplex, eight restaurants and bars, and retailers such as Banana Republic, B. Dalton Booksellers and the Gap. It was built in 1990 and expanded in 1999. The occupancy rate is about 95%.

Meanwhile, Beach Place, also with three levels, has 36 tenants, including 11 bars and restaurants. The occupancy rate is 90%. The property is located near the beach, and its income is bolstered by beachgoers who pay to use its parking lot.v