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Inside the deal: Inland Retail’s $316 million Thomas Enterprises transaction

Inland Retail Real Estate Trust, a part of Chicago-based The Inland Group Inc., made headlines with its recent purchase of more than 2.9 million sq. ft. of shopping centers from Smyrna, Ga.-based Thomas Enterprises Inc.

Four of the eight grocery- and discount-anchored centers are in Georgia. The others are in North Carolina, Tennessee, Florida and Alabama.

The Thomas deal was a case of being in the right place at the right time, says Inland Vice Chairman Joe Cosenza. But it was in large part Cosenza's real estate instincts and persistence that helped position Inland to make the deal. Cosenza notes that the owner of Thomas Enterprises, Stan Thomas, is known for holding properties, not selling them.

Here's how the deal happened:

In early 2001, a large insurance company that had just started doing business in the United States approached Thomas and offered to provide him with a $1 billion credit line for property development. The insurance company also offered to make money available in the event Thomas wanted to refinance, Cosenza notes.

The two parties negotiated for months, but after Sept. 11 the insurance company put off making any new loans. "Stan kept borrowing from existing lenders all those months in the hopes the large loan would happen, and he committed to several other deals," Cosenza says.

"When the crash hit, he couldn’t borrow anymore from his existing lenders, and he found himself at a crossroads," Cosenza says. "He had to either find a lender for long-term financing, or sell some centers. His conclusion was to liquidate. In my opinion, he sold more than he really wanted to."

The properties are, in Georgia, Douglas Pavilion Shopping Center in Douglasville; Venture Point Shopping Center in Duluth; Southlake Pavilion in Morrow; and Newnan Pavilion in Newnan.

The other centers are Fayetteville Pavilion in Fayetteville, N.C.; Sarasota Pavilion in Sarasota, Fla.; Turkey Plaza in Knoxville, Tenn.; and Westside Pavilion in Huntsville, Ala.

-- Staff and wire reports

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