22558, 22576, 22599, and 22608 Mac Arthur Boulevard, California, Maryland

Background:

  • Fee simple property acquisition of a 246,000 square foot community shopping center located in greater Washington D.C. metropolitan area.
  • Purchased from an unsophisticated real estate company.
  • Occupancy at the time of acquistion was 82%.
  • Rushmore had unique insight into the assignment of the dark grocer lease to a strong credit.

Timing:

  • October 2002

Financials:

  • $12.8 million purchase price and a total capitalization of $15.4 million.
  • Purchase price was approximately $52 per square foot and represented a 10% cap rate on in-place income.

Strategy:

  • Re-lease junior anchor and facilitate the lease assumption of a new grocery tenant.
  • Take advantage of weak investor demand for retail properties at the time of purchase.
  • Upgrade the center with parking lot, signage, landscaping and façade capital improvements.
  • Sell property within 3-5 years subject to the strength of the

Execution:

  • By mid 2005, the new grocery tenant, Supervalu, was thriving and the vacant junior anchor was re-tenanted by World Gym and Dollar General.
  • Upgrades to the property were made which drove rental increases in shop space and made stabilization possible.
  • In September 2005, the property was sold for $21.1 million representing a 7.1% cap rate on in-place income.
  • IRR was in excess of 33% with an equity multiple of 2.1x.