Urban low income high population retail property

[Sam B.]

Hi Guys

I have a deal I am wrestling with, if I should put in an offer on or not. I have a 20k sq ft deal which is currently for sale in Philadelphia. The area is densely populated with 265k ppl in a 3 mile radius, and is lower income in demographic. The center was built in 1990, is in good shape, and is anchored by a Family Dollar. My only concern is that its been robbed I count 4 times in the past 6 yrs.. ie a rougher neighborhood. It’s fully stabilized, so not value add.

Should I stay away from low income/high density areas like this? How should I think about returns in lower class neighborhoods? What about pricing on an asset like this?

[Herndon Davis]

You have a national tenant in that shopping center in Family Dollar correct?  How many years have they been there?  How long is their lease? 

 If the numbers crunch properly, I would be hard-pressed to turn down mailbox money especially if the national retailer is paying like clockwork and they also have a cash out plan in place for your property should they end the lease early.

 If I were you I would add value by instalibg new equipment like six or seven visible but unreachable color video cameras across the property. A few extra spot lights.

I would also clean up the property exterior, repaint, repave the parking  put up newere signs.