JV Acquires 350 KSF DC-Area Retail Center

By Keith Loria

Ellsworth Place

GBT Realty Corp., in partnership with Equity Resource Investments and Avante Financial Group, acquired Ellsworth Place. A joint venture between Rockwood Capital and Petrie Richardson Ventures sold the 350,000-square-foot urban retail center in Silver Spring, Md., for $92 million.  

“Anytime a gateway market asset is selling below replacement cost it grabs GBT’s attention,” Scott Porter, GBT Realty Corp.’s managing director of capital holdings, told Commercial Property Executive. “That, combined with the solid tenant base, above average cash returns and further upside, makes it ideal for the type of properties we’re looking to capture with this bucket of capital.”

The deal also included the air rights for a fully entitled up to 250,000 square foot office building to be constructed on top of the existing structure.

“GBT’s plan is to hold Ellsworth Place long-term, so prudence is key in moving forward with the air rights,” Porter said. “Our first step is to initiate studies to help determine the appropriate use and we’ll proceed from there. This is a huge opportunity and responsibility—to do something great for Silver Spring that will improve the shopping and entertainment experience at Ellsworth—but also strengthen the entire downtown core.”

The property spans one city block and it is centrally located in the heart of the rising Silver Spring retail district. The retail center is less than a mile from the Capital Beltway and is close to the Silver Spring Metrorail Station and Transit center.

Strong tenant roster

At the time of sale, the center was 93 percent leased, with 24,000 square feet of available shop space on floors one, three and four. Ellsworth Place is anchored by Marshalls, TJ Maxx, Ross Dress for Less, Burlington and Five Below. Its tenant roster also includes Dave & Buster’s, Guitar Center and Foot Locker and dining options such as Chipotle, MOD Pizza, Not Your Average Joe’s and McGinty’s Irish Pub. To entice new tenants, the company is planning cosmetic upgrades to improve the overall experience at Ellsworth Place.

The recently repositioned, five-story shopping center has attracted a lot of interest and GBT knew going in that it wasn’t going to be an easy transaction simply based on the status of capital markets for large retail assets. “The asset has priced three separate times over the past two years,” Porter said. “But we really like the core tenants that Petrie Richardson Ventures and Rockwood Capital attracted as a result of their redevelopment strategy. We have existing relationships with many of these—and they continue to thrive today. We also believe we can add to the roster to improve credit and rent.”

Core-plus strategy

GBT’s total portfolio has more than $1 billion of commercial assets totaling 5 million square feet in the pipeline or under construction. The Ellsworth Place addition ups the Capital Holdings portfolio to more than $160 million. 

According to Porter, the property aligns perfectly with the pursuits of GBT’s capital holdings division as it is looking to add more assets in gateway markets that fit its overall strategy of core-plus and value-add pricing and execution. “Being just outside of the D.C. triangle is a huge appeal to us and our capital partners,” he said. “Silver Spring is a dynamic market that continues to gentrify and its downtown core is active—which makes it the ground zero for activity and a natural place for retailers to aggregate.”

GBT Realty Corp.’s capital holdings division acquired Overlook Village in January, a 153,820-square-foot shopping center in Asheville, N.C., for $25.5 million. Last September, the company purchased the McFarland Plaza Shopping Center, a 234,124-square-foot retail center in Tuscaloosa, Ala.

Image courtesy of GBT Realty Corp.