KKR & Co. (KKR), the private-equity firm that raised $1.5 billion for its first real estate fund in December, and its partners bought a suburban New York shopping mall from Vornado Realty Trust (VNO) for $94 million.
The 1.14 million-square-foot (105,600-square-meter) Broadway Mall in Hicksville, Long Island, was sold to an investor group including KKR, Cushman & Wakefield Inc. said in a statement today. KKR teamed with Broadway Mall Pacific, a partnership of Pacific Retail Capital Parters, Clifton Realty and Peter Fair of Continuum Partners, for the purchase, said the brokerage, which represented New York-based Vornado. The real estate investment trust said on Feb. 14 it agreed to sell the mall. It didn’t identify the buyer.
“This was a rare Long Island mall offering, and with its great demographics it attracted considerable interest,” Andrew Merin, a Cushman broker, said in today’s statement. Almost 20 prospective buyers toured the property, “an indication of the fact that retail continues to be a strong performer in the heavily populated tri-state area” of New York, New Jersey and Connecticut.
KKR and TPG Capital are among U.S. private-equity firms expanding in property investments to diversify beyond corporate buyouts. Within retail, KKR has bought three regional malls, including Broadway Mall, and one outlet center since it formed a real estate unit in 2011. The New York-based firm said in April 2013 that it was part of an investor group that bought the Colonie Center shopping mall in Albany, New York, teaming with the same partners it had for its first retail deal in April 2012, the $196 million acquisition of Yorktown Center in the Chicago suburb of Lombard.
KKR also entered the outlet-center business last year by winning a January 2013 foreclosure auction for Legends Outlets Kansas City. The purchase price was $131.5 million.
Broadway Mall was built in 1956 as an open-air center, enclosed in 1972 and renovated in 1991, according to Cushman. It is more than 90 percent occupied and anchored by Ikea, Macy’s and Target stores, the brokerage said.
“With a targeted capital improvement program and a revamped leasing strategy, Broadway will be a more attractive home for current and prospective retailers,” Ralph Rosenberg, KKR’s global head of real estate, said in a statement today. The mall generated about $300 million of retail sales in 2013, according to KKR.
Broadway Mall is KKR’s 15th real estate fund investment since 2011, according to the statement. Before raising a fund, KKR used mostly its own cash and money from its credit division, KKR Financial Holdings LLC. The credit unit also invested in Broadway Mall, KKR said.
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