Challenge

Low Country Village is a community power center that was anchored by six national tenants, Ross, Michaels, Cost Plus World Market, Big Lots, Petco, and Pier 1, all with short-term lease expirations. The six boxes made up over 83% of the total income in the center and had lease expirations ranging from 18 months to 3 years. The asset was also priced over $22M, making this very difficult for many private clients.

Strategy

Given the challenging situation with tremendous near-term rollover, Matthews™ has to strategically market the asset by highlighting the market’s high barriers to entry, and below-market rents with some of the box tenants. The Matthews™ team put together best-in-class marketing materials. While the property was sent to the entire marketplace, they specifically targeting family offices, private clients, and institutional buyers, hoping to reach a high-net-worth client or family office in a large 1031 Exchange.

Results

Within a week of marketing the asset, we sourced a private client from Newport Beach, CA that had just sold a $50M+ office building and was in a 1031 Exchange. In order to protect his exchange, the buyer wanted to pre-empt the bidding process. Matthews™ convinced the seller to counter the group at a cap rate 50 – 75+ bps below market expectations, and they accepted. Quietly, Matthews™ continued the marketing process in the background while the buyer performed their due diligence. Ultimately procuring six additional backup offers, of which all were significantly less in price and represented market cap rate expectations. Matthews™ netted the client $1.5M higher than their expectations, awarding Matthews™ with several more listened.