Stockbridge, Cypress Sell New Jersey Walmart for $55M

Walmart Supercenter. Image courtesy of Pegasus Investments Real Estate Advisory Inc.

A joint venture between Stockbridge Capital Group and Cypress Equities has completed the $55 million sale of a 186,000-square-foot Walmart Supercenter in Linden, N.J., a suburb of New York City.

Public records show that Heritage Properties Inc., together with a Naples, Fla.-based investment partner, acquired the property at a 5 percent capitalization rate through a 1031 exchange. State Farm Life Insurance Co. provided $28.5 million for the purchase.

The transaction is part of a large-scale break-up sale of eight retail parcels at Legacy Square, a 47-acre, 328,957-square-foot power center anchored by Walmart, according to ROI. The remaining parcels are expected to trade for a combined $86.5 million.

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Pegasus Investments Real Estate Advisory Inc. represented the buyer and worked to secure the long-term, fixed-rate non-recourse mortgage. SRS National Net Lease Group brokered the deal on behalf of the sellers, while Mark Keener and Adam Block, partners at Gallagher Evelius & Jones LLP, served as their legal counsel.

Part of a larger power center

Legacy Square took shape from 2019 through 2022, at the site of a Second World War-era General Motors manufacturing plant, also featuring a Holiday Inn hotel. Other tenants include LA Fitness, Foot Locker, MatressFirm and One Dollar Zone, as well as Starbucks, Panera Bread, Panda Express and Taco Bell.

Located on 14 acres at 1050 W. Edgar Road, Walmart anchors the property under a 20-year triple-net lease. The Supercenter had 3.7 million visitors in the last 12 months, according to Placer.ai, placing it on the seventh position across the brand’s entire chain of 3,835 U.S. stores.

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A population of 500,000 lives within a 5-mile radius of Legacy Square. The retail center is half a mile from Linden Airport, with direct trucking access to warehousing and logistics facilities operated by Prologis and JFC International. Interstate 95 is one and a half miles away, providing the property with highway access and connections to all five boroughs of New York City. Downtown Manhattan is 24 miles northeast.

Big-box boom

The sale of 1050 W. Edgar Road is emblematic of an increased investor appetite for well-located, big-box oriented retail centers. Key motivators for new investments have been properties where tenants occupy space under some form of net lease, as well as the inclusion of ample dining, entertainment and socialization components.

Metro New York City’s market remains robust, with a vacancy rate of 5.7 percent at the end of March, according to a first quarter 2023 report from Cushman & Wakefield. The value was just 10 basis points above the national average.