Shopping Center, Orlando, FL

Investment Summary

We acquired this asset through a preferred long-term relationship with Target Stores. The asset was 3.1 acres of vacant outparcels to a Super Target anchored center, known as Millenia Plaza. We constructed 3 buildings on 3 parcels with long-term, corporately backed leases. Located in the 23rd largest U.S. metro, the asset draws from a retail trade area that consists of 1.5 million people with a potential for retail expenditures north of $5 billion. The asset is situated at the gateway to Millenia Plaza benefiting from excellent visibility along Millenia Blvd and has a signalized entrance to the larger center. The asset is near the Mall at Millenia, the #1 mall in the state of Florida and top-ten in the US (anchored by Neiman Marcus, Bloomingdale’s, and Macy’s, including Chanel, Gucci, Prada, Louis Vuitton, Tiffany & Co, Burberry, and Jimmy Choo). We closed the acquisition with executed leases, approved permits, a guaranteed-maximum construction contract, and financing in place. We employed a Develop-to-Core asset investment strategy, thus we planned to sell the asset soon after the tenant opens.

Value Creation

Acquired the asset below full-market price while competing against 20 prospective buyers due to a preferred long-term relationship with Target Stores. Executed 10-year net leases with creditworthy national tenants, including average rent psf of $51. Constructed three new buildings under budget and tenants opened for business on schedule. Subdivided the acquired acreage into 3 assets, increasing the buyer pool and commanding a higher price, exceeding the targeted sales price by 20%.

Performance

Going-in cap rate 8.2%

Loan to value 54%

Net IRR 43%

Disposition date 3Q 2017

Term held (quarters) 7