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Marianos Leading Expansion of Gourmet Grocers in Chicago Area

 

A British investment firm that has provided nearly $110 million to finance six new Mariano’s supermarkets in the Chicago area has purchased its third store.

The U.S. arm of Coleshill, England-based IM Properties PLC paid $25 million for the Mariano’s store in northwest suburban Harwood Heights, buying the property from a venture of Chicago-based developer Bradford Real Estate Cos., which developed the building, according to property records. The 73,000-square-foot store, 7401 W. Lawrence Ave., opened in April.

Despite Dominick’s owner Safeway Inc.’s decision to leave the Chicago area and an uneven recovery in the retail market, grocery-anchored properties tend to stand out because food stores cater to shoppers’ daily needs, said Dan Tausk, a principal at Oakbrook Terrace-based Mid-America Real Estate Corp.

“The neighborhood grocery center is always going to be a darling asset, no matter where it’s located,” said Mr. Tausk, who wasn’t involved in the transaction.

Under an agreement with Bradford and Mariano’s, IM Properties provides construction financing to Bradford, then buys the stores once Mariano’s lease starts.

The firm lent Bradford $22.1 million last year to develop the Harwood Heights Mariano’s and has provided at least $87.4 million to finance locations in Vernon Hills, Palatine, Frankfort, Wheaton and Lake Zurich, according to a Crain’s review of property records.
After buying the Harwood Heights store, IM Properties obtained a $35 million revolving credit line on the property, a sign of its increased value. A spokeswoman for Pittsburgh-based PNC Bank N.A., which issued the credit line, declined to comment.

“We like the stability of food,” said Robert Gould, a Naples, Fla.-based vice president for IM Properties’ U.S. unit.

LEADING GOURMET GROCERS’ EXPANSION HERE
Mariano’s, a division of Milwaukee-based Roundy’s Inc., has been leading the expansion of gourmet grocers in Chicago, with 12 stores in the area, according to a company spokesman. The Wheaton location will be the chain’s 13th store when it opens Oct. 29.
Five more are slated to open in 2014, the spokesman said in an email. Mr. Gould said the Lake Zurich store could open in January, although no dates have been formally announced.

IM Properties already has capitalized on investor demand, selling Mariano’s in Palatine and Vernon Hills earlier this year for a combined $46.3 million, or 20 percent more than the firm paid Bradford two years earlier.

IM Properties eventually plans to take title to the stores in Frankfort, Wheaton and Lake Zurich, Mr. Gould said.

In all, the companies have developed about 450,000 square feet for Mariano’s, which leases all of its locations, according to the spokesman.

IM Properties broke into the U.S. market in late 2007 with the acquisition of a 135,000-square-foot retail property in Virginia. The firm subsequently amassed a $30 million portfolio of bank ground leases, including four properties in Illinois, which it sold off last year, Mr. Gould said.

He declined to say whether IM Properties plans to finance any additional Mariano’s developments.

Roundy’s is one of several grocers that have reportedly expressed interest in buying some of the 72 Dominick’s locations. The Roundy’s spokesman said the company will evaluate “any opportunities that may enhance shareholder value.”

A representative for Pleasanton, Calif.-based Safeway did not return a call requesting comment.

Source: ChicagoRealEstateDaily Abraham Tekippe October 22, 2013
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