Wednesday, September 17, 2003
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Wednesday, September 17, 2003 |
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Pavilion dealt for $172M By JOHN THOMPSON
Call it the ultimate sale at Fayette's largest shopping center. Earlier this month, almost the entire Fayette Pavilion shopping center was sold to the Inland Retail Real Estate Trust in Oakbrook, Ill., for $172 million. That figure represents a sale price of $123 a square foot. It is the largest land transaction in Fayette's history and the largest commercial real estate transaction in the Atlanta region so far this year. The sale is the latest acquisition by the company of several of developer Stan Thomas' shopping centers. "He develops really good shopping centers that are good matches for our company," said Inland communication spokesperson Rick Fox. Other acquisitions of Thomas property by Inland includes the Southlake Pavilion in Morrow; the Douglasville Pavilion in Douglasville and the Newnan Pavilion in Newnan. Fox said the company has been in the real estate acquisition business for 35 years and said customers should see no difference at the center. "The tenants will see some changes, such as we have our own company that cleans the parking lots," Fox said. The deal includes all the parcels and leases at the Pavilion, with the exception of Target and Home Depot. "Those two companies traditionally own the land their stores are on," said Fox. Fayette Pavilion now becomes a part of Inland's Real Estate Investment Division, which means local investors could purchase a share in the shopping center. Fox added there are still a couple of out-parcels at the site the could see some future development. Inland is now the third largest owner of retail property in the Atlanta region. According to the website REIT101, A REIT is a company that buys, develops, manages and sells real estate assets. REITs allow participants to invest in a professionally-managed portfolio of real estate properties. REITs qualify as pass-through entities, companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level, providing that certain conditions are met). As pass-through entities, whose main function is to pass profits on to investors, a REIT's business activities are generally restricted to generation of property rental income. Another major advantage of REIT investment is its liquidity, as compared to traditional private real estate ownership, which are not very easy to liquidate, the website states. The website also states the origins of the real estate investment trust date back to the 1880s. At that time, investors could avoid double taxation because trusts were not taxed at the corporate level if income was distributed to beneficiaries. This tax advantage, however, was reversed in the 1930s, and all passive investments were taxed first at the corporate level and later taxed as a part of individual incomes. Unlike stock and bond investment companies, REITs were unable to secure legislation to overturn the 1930 decision until 30 years later. Following World War II, the demand for real estate funds skyrocketed and President Eisenhower signed the 1960 real estate investment trust tax provision which reestablished the special tax considerations qualifying REITs as pass-through entities. REIT investment increased
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