As reported in The Real Reporter by Joe Clements
AMHERST, NH — There has not been an Albany Road in this Manchester suburb— until now. Marking the inaugural buy for Albany Road Real Estate Partners, TD Bank this week dispatched Amherst Crossing to the Boston-based firm, concluding a foreclosure ordeal and mid-summer auction of the 130,000-sf center that for $8 million gives the new owners a junior-anchor plaza whose tenants include Michael’s, Petco and Sports Authority.
“We felt it was worth taking a shot,” Albany Road President Christopher J. Knisley recounts in explaining Albany Road was scoping for opportunities when the auction action came to the newly mint- ed group’s attention. The veteran investor says he was “pleasantly surprised” Amherst Crossing was let go at such a dis- count to an original value some peg closer to $25 million. Knisley opines the proper- ty’s struggles were less reflective of inter- nal weaknesses and more a combination of over leveraged debt and the misfortune in Circuit City becoming one of the key anchors just as the electronics firm was preparing for its recessionary meltdown. “They got into trouble right from the get-go,” relays Knisley, adding he believes many of those issues have been addressed, including Bed Bath & Beyond’s arrival following the Circuit City bankrupt- cy. Occupancy is at 97 percent and Knisley says Amherst Crossing is poised for future upside in rental rates. “It hits all the hot buttons we look for,” he says, among them a rapidly growing population, the cadre of retail heavyweights in the Route 101A corridor, and the property’s relative youth, having been completed in 2008 just as the recession gripped New England. Amherst Crossing shares a signalized crossing with the Lowe’s-anchored Meadow Brook Crossing, and offers underlying upside from leas- ing select units in the center.
Partner Mark McInerney terms the asset “a case in point” for why Albany Road jumped into the New England CRE fray this summer. “One of our original
thoughts was that a well-capitalized, nimble firm will be positioned to take advantage of today’s unique real estate opportunities, opportunities that stem from the struggling economic recovery and the resulting disconnect that exists relative to certain real estate assets and how they’re priced,” McInerney relays this week of the investment contingent that also includes Clark N, Callendar and Steve Strandberg. In chasing Amherst Crossing, McInerney says, “we had the capacity to move quickly and fully commit to what were fairly onerous deposit and closing requirements in a very short period of time.”
“Amherst Crossing was extremely well- received by our stable of high net worth investors, who are very excited about the 20 percent cash-on-cash yields that this investment should generate out of the box,” adds Knisley. The distressed nature of the asset enabled Albany Road to get in at “a really favorable cost basis,” he outlines, while the credit tenant roster and lengthy terms that extend another six to eight years for 90 percent of the center were comforting enough that TD Bank even agreed to finance the purchase with a $5 million mort- gage. “That says something,” Knisley offers of TD Bank being comfortable enough with the sponsorship to take another plunge at Amherst Crossing, albeit at a fraction of the $20 million initially tendered, a figure one source says puts the initial value of Amherst Crossing in the $25 million sphere. That would make the $8 million purchase close to a 70 percent discount from the initial value.
In Amherst Crossing, Albany Road takes on a 15.3-acre property featuring 1,250 feet of frontage along Route 101A and offering two points of access. The new ownership has a few leasing issues to address, but cap- ital improvements are seen as minimal and Knisley says the group overall is “thrilled” to have launched its platform with the acquisition. While below the target of $10 million to $50 million, Knisley says the deal “was too good of an opportunity to pass up” and demonstrates the ability to respond in a tight time frame. “We think it’s a pretty neat story,” he says.