This month we would like to share an update on another one of our centers, Heritage Square, which is a 188,000-sf shopping center located in Granger Indiana, a suburb of South Bend Indiana. Heritage Square is a high-end, grocery-anchored shopping center with a life style component.
Broad Reach purchased the center at the end of 2014. At the time of acquisition, the center was 81% occupied. We were initially attracted to Heritage due to the great combination of a high-volume grocery store and upside in the vacant space. The grocery store is Martin’s Supermarket, a regional chain with sales over $520 per square foot and an operating expense ratio of 1.8%. The Industry standard for operating expense ratio is 4%, so this is a very productive location for Martin’s.
Since acquiring the center, we have leased up more than 27,000 sf and increased the Net Operating Income by $475,979 or an increase of 31%. As importantly, we have substantially improved the tenant mix and added several traffic-driver type tenants such as Starbucks, Orange Theory fitness, Primal Kitchen restaurant, and Heavenly Goat Brewery. These tenants help create a ‘buzz’ and ‘cool vibe’ that will drive more traffic into the center ultimately benefitting all tenants.
The turnaround process thus far has created $7 million worth of value, more than doubled the equity in the center. This Value-creation process has occurred while maintaining a current annual distribution to our investors in Heritage Square of over 8%.
We still have some work to do at Heritage as there is substantial interest in the remaining vacant space, but the center represents another great example of how Broad Reach Retail Partners creates Value through disciplined buying and focused Leasing and Management!
Next Opportunity – Broad Reach Retail Partners Shopping Center Fund II
We are pleased to share that we have reached our initial capital objective for Fund II, and therefore we will be closing the Fund on November 30, 2016. There is still time to participate in this closing but we will need to hear from you in the next couple of weeks.
Fund II Overview:
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Focused exclusively on Value-Add, Necessity-Anchored Shopping Centers
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Great combination of positive cash flow investments with upside potential
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High Yield with Quarterly distributions
Thanks again for your interest, and please let me know if you have any questions.
Sincerely,
Nate Tower
Broad Reach Retail Shopping Partners, LLC