NEW YORK (Reuters) - A real estate concern of Bob Parsons, founder of web hosting company Go Daddy, said on Tuesday it agreed to pay $133 million for a revamped retail center in a Phoenix suburb that was a major foreclosure in 2011 following the Great Recession.
The 76-acre Westgate Entertainment District in Glendale, Arizona, includes 533,000 square feet of retail, office and residential space that was redeveloped by iStar Inc, a real estate investment trust headquartered in New York.
“If you go back to the depths of the recession in Phoenix, Westgate was one of the poster children for big failed white elephant real estate developments,” Los Angeles-based David Sotolov, head of West Coast originations at iStar, told Reuters.
YAM Properties LLC said it is acquiring Westgate from iStar without taking on any debt.
The transaction, which includes 33 acres of undeveloped land, is one of Arizona’s largest retail real estate deals and marks the turnaround of a soured development with the popular “experiential” focus, iStar said in a statement.
Brick-and-mortar retailers can compete with e-commerce if they create a unique destination and offer products that can’t be found online, said James Cook, Americas research director for retail at JLL, a unit of brokerage Jones Lang LaSalle Inc.
“There is a caveat there are certain shopping centers that have a lot of competition or they might not have been built in the right area,” Cook said. “You got to be in a good location to begin with.”
Parson’s YAM Properties said a boutique hotel and more housing, office and specialty entertainment are under consideration for Westgate in a five-year plan, which will benefit from the Super Bowl in 2023 at the adjacent University of Phoenix Stadium.
Parsons is a major Phoenix philanthropist who owns various local businesses through YAM Worldwide Inc, including more than $630 million of metro-area commercial real estate.
Westgate was a $2 billion mixed-use center championed by local developer Steve Ellman with the Gila River Arena, home of the Arizona Coyotes hockey team, as its anchor. The university stadium is home to football’s Arizona Cardinals.
In 2011 iStar Financial foreclosed on part of the property after the Ellman Cos failed to pay the balance of $97.5 million in debt on what was called the Westgate City Center, the Arizona Republic newspaper said at the time.
The size, tenant mix and entertainment opportunities, along with its proximity to the sports arenas, make Westgate a high-profile asset, said Dan Dahl, who heads YAM Properties.
“This property really fits our profile,” Dahl said.
Reporting by Herbert Lash; editing by David Gregorio and Phil Berlowitz