Legends Outlets Kansas City

Jan 13, 2016

Legends Outlets Kansas City has a new owner. Dave Kaup/KCBJ Legends Outlets Kansas City , a 1.2 million-square-foot destination retail center in Wyandotte County’s Village West district, has been sold for the second time in three years. A fund managed by Walton Street Capital LLC, a Chicago-based private equity firm, closed Tuesday on a controlling stake in the shopping center that KKR & Co. LLP (NYSE: KKR) bought in 2013 . Legends Outlets Kansas City has a new owner. Dave Kaup/KCBJ Legacy Development, a Kansas City-based firm owned by Dan Lowe , will retain its minority stake in the Legends, which was developed under Lowe’s leadership when he was with RED Development LLC . Terms of the transaction were not disclosed, but Lowe said it represented a good return for KKR, a real estate investment firm based in New York City. “KKR chose to sell what some might believe to be early; they held it just shy of three years,” Lowe said. “But we’ve achieved significant success with them, and KKR’s goal is to use that success at the Legends as sort of a marketing tool for a large retail fund they’re starting because their returns were quite good.” Originally called The Legends at Village West, the shopping center opened in 2006 and used momentum from surrounding destination retail attractions such as Cabela’s and Nebraska Furniture Mart to sign high-end tenants to attractive lease rates. In 2012, it was renamed Legends Outlets Kansas City, a brand that the new ownership will build on. Lowe said that the center’s sales per square foot have increased from $400 in 2012 to $500. But the owners think they can achieve $800 a foot by transitioning from the current hodgepodge of outlet and full-price stores to a slate of outlets and other tenants that deliver on value proposition plus restaurants and other entertainment venues, Lowe said. The Legends boasts 98 percent occupancy. But Lowe said the goal is build the center’s reputation as a unique shopping destination over time by adding more outlets and brands that are not present in the Kansas City market. In 2016, he said, the owners will focus on creating a cluster of “aspirational,” or higher-end, outlets on the west end of the center. Coach, a luxury brand known for its handbags, will anchor the west end. It opened about 20 pop-up stores throughout the country in 2014, Lowe said, and its temporary location at the Legends was so successful that the center became the only pop-up location where Coach decided to sign a lease for a permanent outlet. “We’re excited about the co-tenancy that Coach will draw to the project,” Lowe said. “Our focus for 2016 is to capitalize on the great opportunity that Coach provides.” Another focus for Legacy Development this year will be the development of a $50 million, 250-unit apartment project atop a new parking garage just west of the current Legends garage. KKR and Legacy Development will continue to own and develop the apartment project, Lowe said. Walton Capital Partners probably would be Legacy’s co-developer for another potential expansion project at the Legends: the development of as much as 500,000 square feet of office space. Lowe said the office component could be developed on 15 acres that include surface parking for CommunityAmerica Ballpark if the developers can find a way to replace the stadium’s parking. If not, there are other places at the Legends where offices could be added, he said. Besides the expansion projects and new tenants, Lowe said, shoppers won’t see any changes at the Legends, which Legacy Asset Management will continue to manage. The Legends’ focus on budget-conscious shoppers began under the ownership of Morgan Stanley, which bought a controlling interest from RED Development in 2007. Morgan Stanley also put $137 million in debt on the center that year, and after occupancy fell during the recession, “they gave it back to the lender” in 2012, Lowe said. Lowe left day-to-day operations at RED Development in 2012 to launch Legacy Development (then RED Legacy). And in 2013, it teamed with KKR & Co. to buy the Legends out of foreclosure. The lender, U.S. Bank, claimed the center’s previous ownership owed $179.4 million. RED Legacy and KKR bought it at auction with a high bid of $131.5 million. Rob reports on real estate and development. Home of the Day