Ohio investment company

BY JOHN SEELMEYER

Phillips Edison & Co. was well along in its negotiations to purchase Silver State Plaza in Sparks when Mervyn's, an anchor tenant in the center, filed for bankruptcy and decided to go out of business.

Faced with an additional 52,800-square-foot vacancy in the center at Prater Way and North McCarran Boulevard, negotiators for Cincinnati-based Phillips Edison went back to the sellers for some hard bargaining.

Phillips Edison said last week it closed its purchase of the 155,647-square-foot center. from a unit of Pacific Realty Associates of Portland, Ore. The purchase price wasn't disclosed.

John Bessey, vice president of acquisitions for Phillips Edison, says the company managed to finance the deal through a combination of equity from an investment fund formed by Phillips Edison as well as borrowings. The company can draw on a $35 million revolving credit line with JP Morgan Chase and a $208 million credit facility led by Bank of America and Wells Fargo.

George Garvin, acquisitions officer for the western states for Phillips Edison, said the deal shows that the company still can get deals closed despite frozen credit markets.

"This demonstrates the ability to complete acquisitions in today's challenging market conditions," Garvin said.

The company, which focuses on buying and improving underperforming properties, now will move aggressively to find new tenants for Silver State Plaza.

The shopping center is about half vacant, although Dollar Tree just opened a location and Fresh & Easy Neighborhood Market is scheduled for a 2009 opening.

"It's a great corner and a great population," said Bessey. An estimated 73,000 people live within a three-mile radius of the corner of Prater and North McCarran one of the most densely populated

neighborhoods in the Truckee Meadows.

Phillips Edison has set aside what Bessey called "pretty serious dollars" for tenant improvements at the property, but the new owners believes the exterior of the property has been well maintained and won't require much work.

The center was constructed in 1975.

Phillips Edison is a fully integrated shopping center owner and handles leasing and property management internally. The company owns more than 25 million square feet of space in 225 neighborhood and community shopping centers in 35 states.