Qualifying the Income in a Retail Property Acquisition

Guest contributors to ShoppingCenters.com industry resource site Jack Nugent, CRRP , Newmark and Rudy Milian, CRRP , Woodcliff Realty Advisors, LLC provide expert insight on navigating critical process of evaluating income in retail property acquisitions, emphasizing the importance of thorough due diligence and strategic negotiation.

Summary Below. Read the full article here: https://shoppingcenters.com/article/qualifying-income-in-retail-property-acquisition

The price you pay to acquire a retail asset is one of the most critical factors in determining how much the investment will ultimately return to you.

Guest contributors Jack Nugent of Newmark and Rudolph Milian of Woodcliff Woodcliff Realty Advisors provide expert insight on navigating critical process of evaluating income in retail property acquisitions, emphasizing the importance of thorough due diligence and strategic negotiation.

Key Points:

• Diligence Importance: Thorough due diligence is crucial to avoid overpaying as retail transactions increase with declining borrowing costs.
• Market Trends: The national vacancy rate in retail centers is at a low of 4.5%, with demand high for modern spaces.
• Value-Add Opportunities: Buyers should target properties with vacant anchors to fill and renovate for improved cash flow.
• Identifying Properties: Use resources like ShoppingCenters.com to find shopping centers with vacant anchors.
• Evaluating Seller Claims: Critical assessment of the offering memorandum (OM) is essential to verify income projections.
• Negotiation Strategies: Buyers must address overstatements separately from potential upsides during negotiations.
• Communication Gaps: Ensure alignment between acquisition and property management teams to avoid revenue miscalculations.
• Capitalization Rate Factors: Various factors must be considered when determining the capitalization rate to avoid overvaluation.

This insightful article underscores the need for careful due diligence and clear communication to enhance retail property acquisition outcomes.

Read the full article here: https://shoppingcenters.com/article/qualifying-income-in-retail-property-acquisition