All Forum Posts by: Rebecca Brannon

Deal indeed died due to a lack of meeting of the minds on price and timeline given the due diligence.  In the end the numbers did not work for us based on our calculations.  Today's interest rates also meant we had no desire to depend on appreciation alone.  Thanks for all the advice.

We went back and asked for the cap rate they advertised based on the NOI we have calculated. After silence for over a week, supposedly we will hear tonight. My guess is this deal is off. Thanks for all the advice. Being a newbie is terrifying! My day job is rather different. ;). I am a historian. If you have questions about the American Revolution, I'm your girl.

And so much thanks to everyone who replied!  I really appreciate it.

 So are price adjustments also very common in the industry in this situation when the offering memorandum does not reflect the real cash flow?

At what point do you come to believe a sloppy seller is being dishonest?  The offering document was based on higher rents and lower expenses than the seller's tax returns or the current leases (now produced, mostly) would support.  The seller also failed to disclose a long-running, 6% a year brokerage fee for every renewal for 3 of the 5 leases in a strip mall.  For one of the properties it could run more than 10 years from purchase.  We discovered the brokerage because it was in one of the leases, but not the others.  After asking the broker, we learned about the additional ones.  The seller claimed the obligation ended with the sale of the building.  That is clearly not true.  The seller is represented by a broker.

We are going back and asking for a price reduction to cover the differences in cash flow between the offering document and the reality. This is the difference between the property having an 8% CAP and cash flowing and not cash flowing at all. The bank that is willing to lend at a reasonable rate also agrees it does not cash flow until 2024/2025 BEFORE the brokerage fee disclosure.

So how common is this?  We are only trying to hang in there because we own a business with an expensive buildout in the strip mall.  But at what point do you just throw in the towel and walk away?

Thanks for any thoughts.

Thank so much for this!  They did pay for their buildout, and presumably chose the space because it is directly across the street from a competitor.  Of course, due diligence being what it is, we discovered outright inaccuracies in rents and expenses in the offering document, so we are trying to reprice the deal.  We newbies have a lot to learn!

Anyone have experience with Lincare as a retail strip tenant?  Looking at a property where their lease is now one year renewable and will end automatic renewals in a year.  What is their business strategy for leases?  Do they like to move around, or do they generally like to stay where they are longer than 5 years?  Thanks for advice for a newbie.