Receiver Showing Kansas City Outlet Center

A receiver is shopping a high-end outlet center in Kansas City, Kan., that could fetch about $135 million — nearly 40% less than its value when it was new five years ago.

Legends Outlets encompasses 1 million square feet of retail space, 620,000 sf of which is up for sale. The offered space is 94% occupied. CBRE has the listing for the receiver, Los Angeles-based E3 Advisors.

Red Development of Overland Park, Kan., completed the property in 2006 as an open-air lifestyle center called Legends at Village West. The following year, a German fund advised by Morgan Stanley Real Estate acquired a 95% interest, while Red Development kept the remaining stake and stayed on to manage the center. The deal, which valued the property at $214.6 million, was financed with a $137 million securitized loan.

When the downturn hit and the retail vacancy rate for the Kansas City area spiked above 20%, the owners struggled to lease up Legends at the rents needed to support the debt. A repositioning of the property as an outlet center helped lift occupancy, but it came too late. The partners also tried to obtain a loan modification. But by May, the special servicer for the securitized mortgage moved to foreclose. A judge appointed the receiver the following month.

Legends Outlets is now metropolitan Kansas City’s only outlet center, and there is no direct competition within 120 miles. Tenants include Ann Taylor, Banana Republic, Cole Haan, J. Crew Crewcuts, Polo Ralph Lauren and Saks Fifth Avenue Off 5th. Separately owned space includes the 88,000-sf Legends 14 Theatre and a 224,000-sf building occupied by Target and JC Penney.

The center is at 1843 Village West Parkway, within two miles of the intersection of Interstates 70 and 435 and 15 miles from downtown Kansas City. It is part of the Village West Tourism District, which draws 10 million visitors per year. The district is home to the NASCAR Kansas Speedway, a minor league baseball stadium, a major league soccer stadium and a casino that opened this year. It also has hotels, offices and other retail space.

The property has distinctive architectural features, including a 150-foot smokestack that highlights its location in a former warehouse district, a two-tiered fountain and outdoor fireplaces.

There are 1.2 million people with an average household income of $70,000 within a 20-mile radius. Outlet centers attract shoppers from greater distances than traditional retail centers. They have weathered the downturn better than other retail properties because they cater to shoppers seeking discounts.

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