Strip Mall investing

[Mark Dante]

Issue: How do you analyze a strip mall?

Here's the situation. I've got an opportunity to invest in a small strip mall. The property needs work and is less than 30% occupied. I've gotten a few quotes on needed repairs. Let me preface my questions but stating that I do plan on having CPA assist me in doing my due diligence. Off the top of my head, I've got the following questions:

1. Seller has provided figures from 2012. It is basically a 1-page Profit & Loss sheet and is certainly not something I would rely on by itself. What financial documents should I be requesting? (I'm sure the CPA will know what to ask but I'm just curious.)

2. Even if the 2012 expenses listed are legitimate, I am thinking evidence of why the strip hasn't succeeded can be gleaned from data. What are the typical operating expenses associated with a strip mall? (For example, the management fee seems really low....I am wondering if the sellers refusal to pay for professional services is resulting in the low tenancy.)

3. The success of this investment is contingent on getting tenancy to 65%. I know the area well and there is a need for a few types of stores in the area. Given the low asking price (relatively speaking), I feel as if I can reach 65% by asking below-market rents. However I am speculating at this point. Obviously, I do not know how much the competition charges. Are there any services/resources that provide data such as the average market rent in an area? (For example, I'd like to know what type of rent per square foot a supermarket looks to spend.)

4. I understand there are different ways to structure a lease, whether it be gross or NNN or modified. Given the condition of the property, a lot of work will be needed on the interior for the prospective tenant. Would the landlord typically provide an allowance to the tenant? Or would the landlord build it out and then increase the rent accordingly?

Thanks in advance for any advice. And if you can suggest any materials/websites/resources pertaining to investing in strip malls, I'd appreciate it.

Thanks

[Mark Dante]

Lining up tenants is a bit of a concern. I just don't know how to go about negotiating when I do not own or have control over the property. Another poster in a different thread had mentioned using a Master Lease with Option to Purchase. I'm not sure if the seller would be open to that just yet. And I don't think a big tenant would be willing to sign a Non-Disclosure Agreement (though I may be wrong).