Inland Western Retail Real Estate Trust Inc. said Thursday that it agreed to buy the properties housing 25 Mervyns department stores for $221.8 million.
The sites, of which 23 are in California and two are in Texas, contain almost 2 million square feet of retail space, the Oak Brook, Ill.-based real estate company said.
Though Inland Western didn’t identify the seller or sellers, the company said that as part of the transaction Mervyns had agreed to new 20-year leases on the properties, with annual rent exceeding $17 million and increasing 1.2% a year over the term of the leases.
Closely held Mervyns, based in Hayward, Calif., said this month that it would close 62 money-losing locations, exiting Michigan and Oklahoma and parts of Colorado, Louisiana and Texas, to focus on the West and Southwest. Target Corp. sold the chain last year for $1.65 billion to an investment group including Sun Capital Partners Inc., Cerberus Capital Management and Lubert-Adler/Klaff & Partners.
“Mervyns department stores have become increasingly profitable since transitioning to private ownership, and we expect these locations to be steady sources of rental income for a long time to come,” Inland Real Estate Acquisitions Inc. Chairman Joe Cosenza said.
The agreement also allows for the sale and development of some parts of the properties, Inland Western said.
Inland Western, an affiliate of Inland Real Estate Corp., a publicly traded company, owns and manages more than 35 million square feet of commercial real estate.