Hamburg stores sell for record $185.7 million

jpatton1@herald-leader.comJuly 29, 2014 

Hamburg Pavillion in Lexington, Ky., on Oct. 4, 2012. Photo by Pablo Alcala | Staff

LEXINGTON HERALD-LEADER Buy Photo

  • The 15 largest real estate transactions in Fayette County before the Hamburg sale:

    1. Griffin Gate Marriott on Newtown Pike, sold in March 2012 for $62.5 million.

    2. Forty/57 Apartments at 4057 Mooncoin Way, sold in December 2012 for $52.5 million.

    3. Griffin Gate Marriott, sold in December 2004 for $45.9 million.

    4. Hilton on West Vine, sold in June 2014 for $37.1 million.

    5. Newtown Crossing on Broadway, sold in September 2013 for $36.75 million.

    6. Racquet Club on Crosby Drive, sold in October 2013 for $36.6 million.

    7. Calumet Farm on Versailles Road, sold in May 2012 for $35.93 million.

    8. Good Samaritan Hospital on South Upper Street, sold in February 2009 for $35 million.

    9. Mt. Brilliant Farm on Huffman Mill Pike, sold in February 208 for $31.5 million.

    10. Tates Creek Center, sold in March 2004 for $31.22 million.

    11. Bridle Creek Apartments on Nicholasville Road, sold in December 2005 for $30.1 million.

    12. Sears at Fayette Mall, sold in June 2013 for $30 million.

    13. Chase Office Tower on Main Street, sold in October 2004 for $29.2 million.

    14. Central Baptist on Polo Club Boulevard, sold in December 2009 for $29 million.

    15. Fountains at Andover on Todds Road, sold in October 2007 for $28.5 million.

    Fayette County PVA David O'Neill

Hamburg Pavilion, the shopping center at the corner of Man o' War Boulevard and Sir Barton Way, has sold for a record $185.7 million, thought to be the biggest land transaction ever in Fayette County.

The properties include all the stores north of Sir Barton Way except the Target store and parking lot, in two parcels, according to David O'Neill, the Fayette County property valuation administrator.

O'Neill said his research indicates that the parcels together are the largest real estate transaction in the county.

The parcels, including some undeveloped sites, were bought by a partnership involving Starwood Capital Group, which owns $36 billion in real estate assets around the world, including luxury hotels, apartments, offices, retail and industrial space.

The parcels include all of the stores from Garden Ridge to Ulta along Old Rosebud Road; the Babies R Us, H.H. Gregg and Regal Cinemas buildings along Star Shoot Parkway; the Hamburg Village shops; the row of Best Buy, Marshall's, Michaels and PetSmart; the row of smaller shops anchored by Party City; and the Barnes & Noble Booksellers, Pier I Imports, Logan's Roadhouse and Old Chicago freestanding buildings between Pavilion Way and Man o' War Boulevard.

The property that includes leased stores sold for $134.1 million. Many of the stores are the original tenants.

The other section sold for $51.6 million.

The Hamburg Pavilion shops were developed in the 1990s after Preston and Anita Madden sold part of their horse farm, Hamburg Place, in 1997 to developer Stan Thomas of Georgia. Thomas Land and Development, now known as Fourth Quarter Properties, sold the land July 23 to a subsidiary of Starwood called HAP Property.

Another portion of the original Madden farm was bought for Meijer for its grocery store; much of the rest is controlled by the Maddens.

Patrick Madden could not be reached immediately for comment.

Fourth Quarter Properties, which has developments across the country, filed for Chapter 11 bankruptcy protection in Atlanta in 2010, with outstanding taxes owed in several states. A reorganization plan was approved in 2011; much of the outstanding debt had been acquired by Starwood Capital.

In a news release, Starwood said Hamburg Pavilion will be managed by Starwood Retail Partners.

"We are excited to add Hamburg Pavilion to our rapidly expanding portfolio of premier retail assets," said Scott Wolstein, CEO of Starwood Retail Partners. "In keeping with our longstanding approach, we expect to build upon our deep relationships with tenants and explore ways to enhance the shopping experience at the property."

Starwood said the regional destination retail center is 99 percent leased. The population of Lexington is expected to grow 5 percent by 2019, with an 8 percent population increase expected over the next 51/2 years within a 3-mile radius of the property.

"Hamburg Pavilion is an established market leader that benefits from strong tenants, convenient access, stable demand drivers and a growing trade area," said Ethan Bing, vice president of Starwood Capital Group. "We are pleased to acquire a high-quality asset and provide our investors with an attractive combination of in-place cash flow and upside in a trending market with significant barriers to new supply."

Janet Patton: (859) 231-3264. Twitter: @janetpattonhl.

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