Class-A mall headed to market in Louisville

Real Estate Alert, May 19, 2004

A development firm will soon be offering a Class-A mall in Louisville that's likely to fetch about $175 million.

The 960,000-square-foot Oxmoor Center, which consists of mid-tier to upscale stores, is owned by David Hocker & Associates of Owensboro, Ky. Granite Partners and Lazard Freres are among the brokers in the running for the assignment. At the expected sales price, the buyer's initial annual yield would be 6.6%.

The mall is anchored by three department stores--Lazarus, Sears and Von Maur--plus Gaylan's, a sporting goods store. Its 312,000 sf of in-line space is 96% occupied by such chains as Ann Taylor, Banana Republic and Sharper Image. In-line stores generate a robust $380/sf of sales. Estimated net operating income is about $11.5 million.

Oxmoor Center was built in 1971 by a partnership between life insurer Safeco and the Bullitt family of Louisville, operating under the name Beargrass Corp. Safeco's retail development unit, Winmar Co., managed the property. In 1999, Beargrass bought out Safeco's 50% stake and installed Hocker as the property manager. Last year, Hocker bought the mall from Beargrass for an undisclosed price.

Oxmoor is one of four malls in Louisville. It is located near the 1.1 million-sf Mall St. Matthews, owned by Rouse. Mall St. Matthews is slightly more high-end than Oxmoor Center, with tenants that include Brooks Brothers, Williams-Sonoma and Abercrombie & Fitch. Rouse acquired a 120,000-sf store formerly owned and occupied by Lord & Taylor earlier this year and is now dividing the space for lease to smaller tenants.

The two malls have been competing head-to-head for decades. Each property generates consistently strong sales thanks to a base of loyal customers. Mall St. Matthews sits on ground owned by the royal family of Great Britain since Revolutionary times, according to retail sources.

About 92,000 people reside within three miles of Oxmoor Center, with household incomes averaging $73,000. The mall has been renovated or expanded three times, most recently in 2001. Its name comes from the historic Oxmoor farm, which once covered 1,100 acres and was owned by the Bullitt family, which settled the area in late 1700s. Trusts controlled by Bullitt family heirs have proposed a 450-acre mixed-use project near Oxmoor.

Hocker owns or manages a 4.5 million-sf portfolio of retail properties in Kentucky, Ohio, Michigan and Mississippi.