Peter Pays Paul

The CoStar Group is reporting that Centro Sells Power Center to Acadia for $78M; 40% Discount.

Acadia said the $78 million purchase price, which equates to $122 per square foot, represents a 40% discount to the center’s replacement cost. Acadia’s president and CEO, Kenneth Bernstein, said the REIT “may be acting ahead of the real estate market’s trough,” but added the company is confident in its purchase due to the center’s “great price,” remaining category-leading tenant mix and high barrier-to-entry location.

It seems like Acadia is getting a huge discount. Whether, it is a good deal remains to be seen. Currently the center is running at a 15% vacancy as two of the national tenants have gone dark.

Cap Rates Rising

Cap rates are rising.

Take for instance this shopping center in Fresno, California. Using the current income and deducting the pro forma expenses, I calculated that the cap rate is north of 9% based on current income for the listing price.

A reasonable cap rate and a discount, do not a deal make.

As the commercial loan market and commercial real estate market deleverage themselves expect prices to come down and better deals to be had.

UPDATE: Lucas Rotter has posted about Capitalization Rates – On The Move at his blog.

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