Off-Market Opportunity Nets Attractive Cap Rate

Challenges

When a property is not formally listed on the open market, it is referred to as an off-market opportunity. Off-market opportunities can be challenging because at times it feels like you are fishing for a bite without a line in the water. Pelican Pointe Shopping Center in Lafayette, LA was a property that was not ready to be formally marketed because it had a looming vacancy exceeding 20,000 sq. ft. The size of the potential vacancy and configuration of the suite posed its own set of challenges.

Actions

Justin Langlois and the team at Stirling Investment Advisors provided two valuations to the property owner. One valuation included a fully leased shopping center with NNN market rents. The second valuation included a significant amount of vacant square footage with a lease-up scenario consisting of average to above-average NNN market rates.

One of the greatest benefits of working with 50+ CRE advisors in the Gulf South at Stirling is the ability to collaborate on projects. Seth Citron in the Stirling Lafayette office identified a group actively seeking shopping centers with vacancies. Citron said the investors required some vacancy for its prospective medical tenant in-tow. The entire sales team, including Citron, were able to address the looming vacancy by making the property more appealing to the buyer.

Results

A cap rate of 7.44% was achieved with the sale of the off-market opportunity.

The buyer was able to negotiate an early buy-out with one of the tenants, which allowed the buyer to lease the space to its medical tenant.

When initially faced with a threatening vacancy exceeding 70% of the total leasable square footage of the shopping center, the team at Stirling provided an underwriting it continues to use today.

Testimonial

The team at Stirling Investment Advisors delivered exceptional results for us on the Pelican Pointe property. The valuation expertise of Justin Langlois along with Seth Citron's network connections in Lafayette, Louisiana got us to the finish line. Way to go, gents!"
- Caleb Harper, Rialto