Sale of Cranberry Square called positive for center

State pension system pays $18.9 million for facility

January 29, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

The recent sale of Cranberry Square shopping center in Westminster to the state's pension fund may not have an immediate economic impact on the area, but local officials say the deal bodes well for the community.

The Maryland Retirement and Pension System, which has a portfolio of more than $28 billion, looks for commercial properties that have a positive cash flow, are leased and can be sold for a profit, said state Treasurer Richard N. Dixon, who chairs the system's board of trustees.

"We thought this was very attractive," said Dixon, who lives near Westminster.

The sale of the 140,000-square-foot center at Route 140 and Center Street, which includes anchor stores Staples, Pier 1 Imports and a Giant supermarket, was completed Tuesday for $18.9 million.

The center, which is fully leased, will remain under the same management. Store owners and shoppers are not expected to notice any change.

The center was sold by Corporate Office Properties Trust, a real estate investment trust based in Bala Cynwyd, Pa. The trust acquired the shopping center in October when it merged with Constellation Real Estate, a subsidiary of Baltimore Gas and Electric Co. But, as the trust's name suggests, it is focusing on office space and is selling retail properties, said spokesman Larry Lichtenauer.

The sale was a shot in the arm to area boosters.

"I think it's a gold star," said Thomas B. Beyard, Westminster's director of planning and public works. "It means it must be a good investment -- the fund wouldn't get involved if it wasn't successful."

R. Douglas Mathias, executive director of the Greater Westminster Development Corp., agreed. Cranberry Square "has a high-level look now, and it will probably inspire other people to look at other properties in the area," he said.

Owners of Cranberry Mall, across the street from Cranberry Square, shouldn't expect any calls from the pension fund, Dixon said. The mall has been on the market since August and recently lost an anchor store when Caldor closed.

"It's not as solid financially -- we're not interested," Dixon said. "We purchase fully leased units with good tenants."

The pension fund paid $9.4 million in cash and assumed the center's $9.5 million mortgage, said Peter Vaughn, director of the state system. He said the center is projected to bring profits of $150,000 a month -- a 9.3 percent return.

Only 3.4 percent of the pension fund's holdings are in real estate -- the rest is stocks and bonds -- but when it does buy property, managers tend to look in growing areas. The fund owns shopping centers in Harford, Anne Arundel and Montgomery counties.

The sale "really hasn't made a difference to us," said Wendy Snavely, assistant manager of Pier 1. "The only thing they can do to better improve the square is we need a stop sign in front of Pier 1 so people can cross. We get a lot of complaints from customers."

The purchase price was fair and the deal makes sense for the state fund, said Tom Maddux, a principal at commercial real estate brokerage firm KLNB Inc.

"It's well located with attractive anchors and quality construction, good access and a good tenant mix, and it's in a growth area," he said. "It's a very conservative, low-risk investment."

Pub Date: 1/29/99

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