Tenant Flights in shopping center - Posted by Askdan

Posted by ray@lcorn on August 16, 2007 at 14:46:24:


My guess is the prospectus assumed the buyer would be able to re-let the vacant space for higher rents. That’s what typically passes as upside potential in the broker universe.

I also would guess that there is a good reason for the mass exodus of existing tenants. Before I went any further I would have to know what that reason is… perhaps a new center opening elsewhere in the market, or the locus of retail activity has moved completely, or the market is declining in general (decreased population and employment), etc.

In short, I would not make an offer based on the info you’ve shared so far. If after doing basic market research you believe the center is a turnaround opportunity, then would be time for a look at the current leases for valuation on the actual income, not projected lease rates. Don’t be surprised if the true value comes in much, much lower than the asking price.


Tenant Flights in shopping center - Posted by Askdan

Posted by Askdan on August 14, 2007 at 21:06:25:

I am contemplating submitting LOI for a neighborhood shopping complex with an NOI of $ 455,900 in a NNN lease situation. Over the last few days, however, I noticed that some of the tenants have either moved out or are planning to move by their sign. The investment prospectus originally promised an increase of +/- $40,000 for the first year. Should I withdraw my LOI and if I want to proceed with the deal what steps should I take to demand more concessions from the flight of tenants? Please advise.