Challenge

The center boasted a stacked tenant line-up with retailers such as Walgreens, McDonald’s, Chipotle, Chase Bank, and Panda Express. However, despite the strong tenant lineup and strong price point that would typically place the asset into the institutional buyer pool, the center lacked a core tenant draw and was only 77% occupied. Without a strong anchor-tenant and a fully-occupied center, the property was outside the core bucket of institutional buyers who are willing to pay top dollar for an asset. Therefore, Matthews™ was given the challenge to market and find a buyer who would pay core pricing for a center outside of the typical core criteria.

Strategy

Matthews™ decided to market the shopping center and the Walgreens separately in order to facilitate the highest price for the asset. Utilizing the Matthews™ competitive marketing technology and expansive database, the team successfully executed two separate marketing strategies by targeting different buyer pools. Del Oro Marketplace was marketed to sophisticated value-add buyers who were looking for a low price per square foot shopping center deal. Walgreens was positioned as a trophy, long-term, triple-net asset that was the perfect “coupon clipper” to satisfy a private client’s exchange.

Results

The team successfully generated multiple offers from seven different parties, and therefore, was able to dictate pricing and terms to get an excellent price for the seller and provide flexibility with their exchange. Matthews™ facilitated the exchange and placed the client into three off-market properties, which more than doubled their cash flow position. The transaction broke the five-year record for the lowest cap rate sale of a non-anchored neighborhood shopping center in San Diego county.