Retail | Richmond, VA
Acquisition: Premier first became aware of this 162,000 sf Food Lion center in 2008 through its relationship with GE, who had owned the property for more than 10 years. GE wanted to sell the shopping center on several occasions over the years, but they were dogged by environmental problems resulting from the presence of an old dry cleaning plant. During the cleanup, which took many years, a number of tenants left and new leasing was difficult. When the property was finally certified clean, occupancy was down to about 67% making it challenging for the seller to meet its minimum price requirement, Premier subsequently stepped in with a creatively structured purchase offer that gave GE credit for some pending leases while still maintaining a 9 cap on in-place income.
During the acquisition, Premier was approached by Broad Street Ventures, another DC area real estate company trying to build its shopping center portfolio. Broad Street made Premier an offer to provide both debt and equity financing in return for becoming a partner in the deal, and a mutually beneficial partnership arrangement followed. Premier and BSV closed on the acquisition in March 2012.
Actions: Premier Management immediately implemented a number of changes, including a property improvement program and new, highly-focused leasing and marketing strategies. In addition to those efforts, we called back old prospects that had looked at the center in prior years but had not leased. We additionally created a targeted list of prospect categories compatible with our tenant mix and demographics for our brokers to pursue.
Our improvement program has initially focused on cosmetic enhancements. We have installed all new pylon and tenant signs, some with scrolling electronic messages, to bring attention to our new ownership and revitalize our tenants presence. We have installed 800 linear feet of new brightly colored awnings that not only freshen the center but let the community know that changes are underway. We have installed new landscaping that complies with County requirements, in addition to significantly trimming trees and bushes to improve visibility. And we’re in the process of installing high definition video surveillance for enhanced security and liability protection at the center. Of course, we’ve also addressed many more mundane but important issues, from addressing sidewalk trip hazards to replacing many HVAC units to putting vacant suites into leasable condition.
Results: Within the first year we signed major leases for 11,000 and 8,000 sf respectively, in addition to several smaller leases. We have also renewed every tenant that has had a lease rollover, all at increased rents, and evicted one chronically delinquent tenant. Premier and Broad Street have developed a strong working relationship that has benefited both parties and our investors, who have received all of their quarterly payments as scheduled. Equally important, the physical improvements and revenue from the new tenants will create significant value for the team and the investors.
Management: Premier manages this property.
Ownership: The principals of Premier have an ownership interest in this property.