Goldman Sachs Asset Management sells 303,000-sf Phoenix center to Cohen & Steers REIT and Sterling

Goldman Sachs Asset Management has sold Grand Canyon Crossing, a 303,000-square-foot Phoenix shopping center, to Cohen & Steers Income Opportunities REIT Inc and the Sterling Organization, Connect CRE reported, with no price disclosed. Completed in 2005, according to Commercial Search, which the Connect CRE report cites, the center is 99 percent occupied and anchored by a 207,000-square-foot Walmart Supercenter. That box takes just over two-thirds of the rentable area, with Harbor Freight, Starbucks, Wendy's, Jamba Juice and Sonic among the remaining tenants.

The 33 acres at Bethany Home Road and 35th Avenue, about 1.5 miles from Grand Canyon University, have roughly 3,000 square feet of vacancy. There is almost nothing for a new owner to lease, so whatever return the buyers underwrite has to come from rents as leases roll. The report does not say what each buyer will do, but Cohen & Steers Income Opportunities REIT Inc is named as a buyer alongside Sterling, which describes itself as a vertically integrated private equity real estate firm investing in retail and distribution assets across the risk spectrum in major US markets. The pairing of a REIT and a value-add operator on one asset suggests a joint venture that separates an income buyer from an operator with a plan for the rent roll, though the report names no structure, no price and no split of control; for Goldman's asset-management arm, the sale reads as an exit at full occupancy.

Sterling's name landed twice in the same day's retail tape, including its purchase of West Hollywood Pavilions Marketplace, a 69,622-square-foot center that is 89 percent leased and was bought for a value-add fund, with no price or seller named. The all-cash Vista strip sale we covered last week kept its price private as well. On those deals the occupancy is public and the basis is not, and the Phoenix sale follows the same pattern: none of the three named a price.

With construction starts frozen, scarcity gets priced through assets that already exist, and a 21-year-old center at 1 percent vacancy, anchored by a box carrying two-thirds of the square footage, is that argument with a rent roll attached. The Walmart concentration runs the other way too, since one tenant's credit stands behind most of the space.

That leaves the 96,000 square feet outside the Walmart box as the place where the next lease event and any rent growth will come from — and the part of the rent roll the report says least about.