A Virginia real estate firm with several irons in the fire in the Charleston area has struck a deal to finance and eventually buy a new shopping center coming to a fast-growing corner of Berkeley County.
Armada Hoffler Properties Inc. announced that it will provide a short-term loan and advisory services for the 148,000-square-foot Nexton Square that's under construction in Summerville. The company recorded a $21 million mortgage with the Register of Deeds this month.
The company described the open-air lifestyle center as the future "retail gateway" for residents of the more than 10,000 homes on the drawing board for the neighboring 4,500-acre Nexton development near U.S. Interstate 26 and Highway 17-A.
The company also said it has "a below-market option" to buy the retail property from SC Brighton Summerville once it's finished. The sale price was not disclosed. Armada Hoffler estimated it will cost $45 million to build out Nexton Square.
“Centrally located between the Boeing production facility to the south and the new Volvo assembly plant to the north, the Summerville submarket sits squarely along the path of growth in the region," CEO Louis Haddad said in a written statement. "As an integrated component of Summerville’s newest residential community, Nexton Square is strategically positioned to capitalize on that growth."
Haddad said the company plans to exercise its purchase option.
Armada Hoffler also will consider using the proceeds from the sale of another property to acquire Nexton Square. That would enable it to postpone paying capital gains taxes in what is known in real estate jargon as a "1031 exchange."
"We love lifestyle centers, we love Charleston," Haddad said during a recent conference call with analysts. "And there certainly will be something in our portfolio that we will be less desirable of."
SC Brighton is an investment group led by Greenville-based RealtyLink Commercial. It broke ground on Nexton Square in January.
The first phase calls for 120,000 square feet spread over 13 buildings. More than 75 percent of the space is either preleased or reserved by letters of intent, according to Armada Hoffler. Tenants include Halls Chophouse, Taco Boy and Southern First Bank.
Businesses are scheduled to start moving into Nexton Square in the first quarter of the new year, with completion expected by late 2020.
The newly announced Summerville deal is the fourth real estate investment in the region for Virginia Beach-based Armada Hoffler.
The publicly traded company also is a partner in two apartment projects on the Charleston peninsula, including a student housing complex, and a Lowes Foods-anchored shopping center called the Market at Mill Creek that's nearing completion on S.C. Highway 41 in Mount Pleasant.