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Lakeway shopping center sells for $114 million


Highlights

The buyer of the H-E-B-anchored center is FHF I Oaks at Lakeway LLC.

The sale did not include 34.7 acres of undeveloped property behind Oaks at Lakeway.

Austin-based developer Stratus Properties Inc. said Tuesday it has completed the sale of its Oaks at Lakeway shopping center for $114 million.

The buyer of the H-E-B-anchored center is FHF I Oaks at Lakeway LLC – an affiliate of the same company, Massachusetts-based TA Realty LLC, that pulled out of a deal to buy the 236,739-square-foot center for the same price in November.

Stratus, at the time, said the deal was terminated because the center was still being developed and “accounting and tax mechanics… proved to be very complicated.”

Negotiations continued, however, and Stratus said the new agreement is “substantially the same” as the original one.

Terms include Stratus paying the buyer rent for some of the center’s unoccupied spaces. Initially, the company expects to pay about $170,000 per month, with that amount decreasing over time as storefronts and pad sites are leased.

The sale did not include 34.7 acres of undeveloped property behind Oaks at Lakeway, Stratus said. That land is zoned for civic, hotel and residential uses.

In addition to H-E-B, the center’s tenants include Torchy’s Tacos, Twin Liquors, MAD Greens, AT&T, Hat Creek Burgers and High Five, a family entertainment center.

Stratus said its net cash proceeds from the sale were $50.8 million after the developer paid off its construction loan for the project, covered transaction expenses and paid H-E-B a “profits participation payment.”

The company says it has no debt outstanding other than project-specific debt related to four separate developments, including the refinancing last year of downtown’s W Austin Hotel and Residences.

“The sale of the Oaks at Lakeway is in accordance with our five-year plan and at a price that exceeded our expectations,” Stratus president and CEO Beau Armstrong said. “We believe this transaction provides strong evidence of the value created by our company’s strategy, including our retail development program.”

That retail development program includes two more H-E-B-anchored centers planned for Killeen and Magnolia, just north of Houston.

“There’s no one better in the business than H-E-B,” Armstrong said. “We feel very fortunate to be able to work with them. No one understands their customers better.”

With some brick-and-mortar retailers taking a hit from online sales, Armstrong said Stratus has been very careful when it comes to selecting tenants for its projects. Key categories, he said, include food, fitness, entertainment, spas and medical.

Lantana, an $80 million Stratus project planned for Southwest Austin, for example, will have Moviehouse & Eatery, a 10-screen dine-in movie theater, as an anchor. Construction should start in April.



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