Ohio real estate company buys Promenade at Bonita Bay

Patrons of Bennigan's outdoor bar hang out Saturday night in the Promenade at Bonita Bay. The bar has become a magnet for the night crowd after the Aja Lounge next door was closed. Jeremy Lyverse/Staff

Photo by Jeremy Lyverse

Patrons of Bennigan's outdoor bar hang out Saturday night in the Promenade at Bonita Bay. The bar has become a magnet for the night crowd after the Aja Lounge next door was closed. Jeremy Lyverse/Staff

Patrons of Bennigan's outdoor bar hang out Saturday night in the Promenade at Bonita Bay. The bar has become a magnet for the night crowd after the Aja Lounge next door was closed. Jeremy Lyverse/Staff

Photo by Jeremy Lyverse

Patrons of Bennigan's outdoor bar hang out Saturday night in the Promenade at Bonita Bay. The bar has become a magnet for the night crowd after the Aja Lounge next door was closed. Jeremy Lyverse/Staff

The secret is out.

The new owner of the Promenade at Bonita Bay is R.L.R. Investments LLC, a national real estate company based in Ohio. The troubled shopping center in Bonita Springs sold for $5 million during an online auction in mid-July, but the deal wasn't recorded in Lee County property records until Thursday, a day after it officially closed.

"We are seeing all kinds of interesting prices out there. But the market has spoken," said Craig Timmins, a commercial Realtor and a principal in Investment Properties Corp. in Naples.

He declined to comment on whether he thought the price the new owner paid was too much or too little for the 106,545-square-foot mixed-used shopping center in today's uncertain market. Bids started at $2 million.

"In the last 18 months, there's been more interest in investing in commercial real estate in Southwest Florida," Timmins said. "People can buy property significantly below the replacement cost and the market is responding to those prices."

The same family that owns R.L.R. Investments owns Royal Shell Real Estate, a Sanibel-based company that's big in vacation rentals and has aggressively expanded in Lee and Collier counties since last year, with a business model that includes real estate sales and property management.

"We are always looking for good investments and when the investment can complement a business we have in the market, it is an added plus," said Don DeLuca, a vice president and general counsel for R.L.R. Investments and a managing broker for Royal Shell Real Estate.

In Florida, he said, R.L.R. has significant holdings, ranging from truck terminals and warehouses to the Royal Shell Port Sanibel Marina.

Royal Shell has its roots in a trucking company. It was an outgrowth of R+L Carriers, founded by Ralph L. Roberts more than 40 years ago. As the trucking company grew, so did its real estate needs. That's why R.L.R. Investments LLC was formed in 1998.

The sale of the Promenade was handled by auction.com and C-III Realty Services. The center – in front of the Bonita Bay golf community off U.S. 41 north of West Terry Street – is about 40 percent leased, not including spots occupied by local artists. The artists have been allowed to move into empty storefronts rent-free, in partnership with the Bonita Springs Art League.

No decisions have been made about whether the artists can stay or whether the Promenade will continue to offer a seasonal farmers market.

Remaining tenants hope for change. Rental rates have been on the rise and some were trying to negotiate new leases before the shopping center sold.

"I think we're all very optimistic. The person that has bought it they specialize in retail property and it's my understanding that what they want is to rebuild the Promenade with retail space and restaurants," said Sondra Hon, a general manager for Roy's, a popular restaurant that has been at the shopping center for 14 years.

Despite the center's troubles, Roy's has a loyal following there and wants to stay, she said.

The new owner's plan is to continue to operate the Promenade as a shopping center.

"We plan on leasing the asset up after dealing with the maintenance issues," DeLuca said. "We plan to be selective on the tenants and create a center of stability where the tenants remain for many years."

He said the purchase price reflects "a lot of upside potential.

"However, there is significant deferred maintenance and in order to capitalize on the investment we will need to spend some money, which we are willing to do and plan to do," DeLuca said.

Built in 1998, the Promenade has 47 units and sits on nearly 8.8 acres. Originally developed and owned by the Lutgert Cos., the property ended up in the hands of a bank after it foreclosed on a mortgage, court records show. The seller was U.S. Bank National Association.

David Stevens, another principal in Naples-based Investment Properties Corp., said the purchase price – at less than $50 per square foot – is what he would consider a little more than the value of the land.

He questions whether the Promenade can make it as a shopping center with so much other competition nearby. While the new owner can offer lower rental rates after paying such an affordable price for the center, the real challenge will be the high operating expenses that come with it, Stevens said.

"The general consensus among my peers and clients was that we couldn't see the merit of continuing to operate it as a center long-term and really didn't have an alternative use in mind that would warrant paying $5 million for the underlying land," he said.

The shopping center has been in a downward spiral for years. Many factors conspired to hurt the Promenade and its businesses, including a bad economy and increased competition from newer, bigger and hipper shopping centers, such as Coconut Point, Gulf Coast Town Center and Mercato.

"Larger centers certainly have the benefit of more synergy, It becomes more of a destination," Timmins said.

"Other properties are simply bigger and can draw more people from a wider area, with a bigger selection of businesses there."

Connect with Laura Layden at www.naplesnews.com/staff/laura_layden

© 2012 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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