The Florida Department of Transportation is actively negotiating to buy the Crossroads of Lake Buena Vistashopping center directly across from a Walt Disney World main entrance, with a lone appraisal of $145 million as the starting point.
The project has also been accelerated since last year, with tenants told they'll need to vacate within 18 months, and a construction start anticipated for Fiscal Year 2020.
An FDOT spokesman declined to comment Wednesday on the offer price, citing exemption from public record. It will be the most highly valued property taken for Right-of-Way in the I-4 Ultimate process thus far.
The 29-acre property is owned by TIAA-CREFaffiliate TH Real Estate, which bought it in 2005 for $54 million from Disney Development Co. It is fully leased by JLL Vice President Justin Greider, and is a dining destination for tourists with some of the highest performing locations in the country for restaurant chains there.
Based at the northeast quadrant of Interstate 4 and S.R. 535, the retail center has more than 155,000 square feet of space occupied by a Gooding's supermarket, a miniature golf attraction and national chain restaurants. Among those are McDonald's, T.G.I. Fridays, Red Lobster, Pizzeria Uno, Perkins, Tom & Chee and Noodles & Company.
A ROW cost estimate was updated by FDOT in October. Land owner TIAA has not submitted its own separate formal appraisal, but is using private appraisal data as it negotiates with the state.
A formal negotiation period is scheduled to start in early May, in anticipation of closing on the land by end of year and a construction start in 2020, per FDOT's five-year work program for this stretch of I-4 BtU.
"Clients got a letter from FDOT stating they have to cease operations there within 18 months. But the absolute deadline to close is unknown," he told GrowthSpotter. "So they're seeking other locations, but these are among the highest (sales) volume units in their respective chains, so equivalent sites may not exist for them."
The negotiations are not a simple two-way transaction between FDOT and the land owner, and involve consulting with tenants to properly estimate how much they claim to be owed for time left on their leases, and investment in FF&E.
FDOT had allocated $309 million in ROW funding as of last fall for the 14-mile segment that includes the S.R. 535 interchange, over fiscal years 2018-2022.
Raymer F. Maguire III, whose boutique law firm specializes in eminent domain, said Wednesday that under eminent domain law the government is entitled to acquire the full title of a property. A fee-simple owner like TIAA that is carrying tenant leases must then divvy up their proceeds among the tenants.
Under apportionment, a typical eminent domain provision dictates that the landlord can keep the portion of sale proceeds allocated to the value of land and buildings that it constructed or owned outright. The tenant could make claim for the value they invested in their leased space, Maguire said.
"So you can expect to see immense wrangling between the owner and tenants in the future over those values, and the lease provisions," he said.
Under Florida law, the full taking of a property via eminent domain means the tenant won't have legal claim to compensation from FDOT in the sale itself, if FDOT can justify that is has a need for every square foot of land it is taking.
That doesn't negate the right of every tenant to file a separate relocation claim with FDOT. Business owners can choose to accept a $40,000 lump sum payment typically, but those in Crossroads should be eligible for a larger relocation package based on their lease terms, and whether they own their FF&E.
Certain costs are capped. If the business does move, it can only recover $25,000 toward the cost of building out the new space. But the cost of moving equipment and inventory is case-specific.
In addition to moving costs, if a tenant's rent at a new location is higher they can also petition FDOT for compensation on that difference, for a period of time.