DELIVERING ABOVE EXPECTATION RESULTS FOR VALUE-ADD / HIGH-VACANCY SALE
CHALLENGE:
An individual private investor purchased a 24,000 SF strip retail center in the northern Atlanta suburbs from a bank REO during the Great Recession. Ownership self-managed the property and leased to a noncredit, mom-and-pop tenancy. The nature of the existing tenancy presented uncertainties about the inplace rent roll and raised questions of whether to sell with the risks of the existing tenancy or to pursue retenanting and create a more stable rent roll. As the economy and real estate market flourished in 2017, ownership was eager to pursue other business opportunities and realize the value created in the property.
ACTIONS:
Ben provided an analysis comparing a theoretical strengthened tenancy and a sale in the future versus a sale of the asset with the in-place rent roll. With consideration of an anticipated rising interest rate environment, the decision was made to pursue a sale and Ben and his team packaged and released the property to market at an 8 cap on existing in-place net income. Within one week of releasing the property to market, six legitimate offers were received from credible purchasers. Ben used the multiple offers to negotiate an agreement with an out of state purchaser for $3.8M, an expectation exceeding 7.8 cap rate.
RESULT:
Fears surrounding the unstable tenancy were realized when three tenants defaulted and vacated during the contract period. JGRE’s retail leasing team provided important intelligence on the current retail leasing environment, and Ben’s strong negotiation and communication skills and creative problem solving in the face of significant changes, maintained buyer interest, and led to a successful re-trade. Ben obtained an ultimate sale price for the Seller that, despite the significant changes in the tenancy and income from the time of contract, exceeded Seller’s expectation.
Client Testimonial:
“Ben’s experience and negotiation skills proved to be critical as we went through the sale of my shopping center. It turned out to be a complicated transaction, and Ben got it across the finish line. I would be pleased to work with Ben again.”
– David Kim
