Retail real estate investment in NC

[Daniel Salonis]

Investment Info:

Retail property investment in Fayetteville, NC.

Marketfair Shopping Center is a completely redeveloped neighborhood retail center located near the largest military base in the world, Fort Bragg. Having undergone $20 million in capital improvements and renovations, the property benefits from a synergistic mix of fitness, daily-needs and service-oriented tenants including a brand-new Lidl grocery store and Planet Fitness.

What made you interested in investing in this type of deal?

The property is located a stones-throw away from Fort Bragg, one of the largest military bases in the world, and was completely redeveloped in 2018.

How did you find this deal and how did you negotiate it?

This was an off-market transaction which allowed us to make our money on the buy and negotiate a win-win scenario for us and the selling group.

How did you finance this deal?

We worked with Morgan Stanley in securing a 10-year fixed rate deal just above 3% with 3 years of interest-only. We were even offered 10 years of interest-only (for retail!!!), which shows how confident MS was in the long-term stability of this property.

How did you add value to the deal?

Within 30 days of owning the property we executed 2 signed LOIs for a medical user to lease 1,900 sqft and the government to lease 6,000 sqft. These deals alone increase the property's value by almost $2 million and significantly improve our cash flow.

Lessons learned? Challenges?

We bought the property from a large REIT who insures their properties under an umbrella policy. It's important to note because we received push back from several insurers who refused to insure properties with movie theaters, which we didn't anticipate being an issue initially.

We eventually obtained multiple quotes and put great coverage in place, but always ask if the property you're buying is under an umbrella insurance policy.

[Daniel Salonis]

@Justin Tahilramani luckily for us all the heavy lifting had been done at the property. If that wasn't the case, and our anchor tenants didn't have long-term leases, we wouldn't have been as interested. That Freedom Center (I think that's the name) is also a very nice property.