Ohio REIT Buys Oakland Whole Foods

Oakland Whole Foods The Registry real estate

By Jon Peterson

Beachwood, Ohio, -based DDR Corp. has paid $41 million to acquire the 57,000 square-foot Whole Foods store in Oakland located at 230 Bay Place at the intersection of Harrison Street near Lake Merritt.

The property sold for less than a 6 percent capitalization rate, or initial yield, said Nicholas Bicardo, managing director for Holiday Fenoglio Fowler L.P. in its San Francisco office.

Bicardo, Executive Managing Director Matthew Lawton and Associate Director Mark Damiani represented the seller in the transaction, Los Angeles-based Bond Cos.

The return is based on the current net operating income being produced by Whole Foods, Bicardo said. “We had more than 20 offers for the property. I think we probably would have had more if it hadn’t been a stand-alone, but the tenant would have been part of a larger shopping center,” Bicardo said. “I do believe that in general terms, there are not a great deal of West Coast retail assets being brought to the market for sale. So when one does hit the market, especially one with strong credit, it will attract many buyers.”

The Bond Cos. did not respond to calls for comment.

The Whole Foods store’s performance is very strong, exceeding the average of $850 a square foot. This puts the property in the top 15 percent of the stores in the Whole Foods chain, Bicardo said. The store incorporates a portion of the former showroom of Cox Cadillac. It also includes a roof deck parking structure. It was completed in 2007. The Whole Foods lease has another 15 years of term.

DDR confirmed that it is the buyer, but it would not comment on the purchase price. Garrick Brown, director of research for Cassidy Turley Commercial Real Estate Services, confirmed the price.

The Whole Foods store has very strong demographics. The property’s trade area encompasses an area within a 15-minute drive including Piedmont and Berkeley and the Oakland Hills neighborhood. There is a population of 490,000 people living within a five-mile radius of the property; the average household income is $75,000.

DDR is a major owner and manager of shopping centers with 454 properties in the United States, Brazil and Puerto Rico, according to its Web site. The public real estate investment trust typically looks for properties in high barrier-to-entry markets with stable populations and high growth potential. In San Francisco, it has owned Van Ness Plaza at 1000 Van Ness Ave. since 2002. The 123,000-square-foot property has annual rent of more than $3.8 million. It also owns 20 percent of Hilltop Plaza at 3401 Blume Drive in Richmond with 246,000 square feet and annual rent of $2.13 million.

It reported a net loss attributable to common shareholders of $7 million in the fourth quarter and $60.3 million for the year.

Bond Companies claims two San Francisco real estate projects, according to its Web site: the BridgeView Towers condominiums at 400 Beale St. in San Francisco’s South Beach neighborhood and The Aurora at Yerba Buena at 788 Harrison St., which includes a Whole Foods and 160 apartments.

Photo courtesy of Bay Area Bites and Beyond on flickr

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