Performance

All the properties below are in growth markets with strong profiles and sound real estate investment fundamentals.

Weybridge Capital has completed the following acquisitions totaling $16.2 million, with $5.2 million in equity raised:

FOX LAKE COMMONS SHOPPING CENTER

Back to Top

LEAWOOD PLAZA SHOPPING CENTER

Back to Top

HIGHLAND PLAZA SHOPPING CENTER

Back to Top

FISHERS CROSSING SHOPPING CENTER

Back to Top

VILLAGE SQUARE SHOPPING CENTER

The historical performance of the above properties is not indicative of the future performance or return of these properties or other acquisitions.

Prospective investors should note that nothing constituted on this web site should be construed as an offer to sell securities. Offers to sell securities will be made by Weybridge only to persons and entities having a preexisting relationship with Weybridge or its advisors and can be made only through a private placement delivered to the prospective offeree in question.

Back to Top

Recent Press Releases

FOR IMMEDIATE RELEASE

Shopping Center Acquisitions Pitfalls Investors Should Avoid

Appeared in Carlson Reports, October, 1996

By Robert H. Glaze

With many changes occurring in the shopping center industry brought on by changes in customer buying habits and the impact of the Internet, neighborhood convenience shopping centers still maintain their appeal to many real estate investors. However, caveat emptor, let the buyer beware, as there are many pitfalls to avoid upon purchase. Many feel that the future value of a property is really determined at the time of purchase, therefore, reducing mistakes upfront will help maintain the property's value in the future.

Physical Concerns

The property should have strong visibility from the road. Try to avoid centers with outparcels that block the visibility of the tenants. Even landscaping can hurt tenant visibility, so visualize what bare trees in Fall and Winter will look like with leaves in Spring and Summer. Also look for strong access into the property. Centers that have poor access, restricted turns either upon ingress or egress, or even those located at extremely busy intersections with no traffic light into the property may drive away potential customers. Shopping center design and configuration is key to any purchase. Bay depths should be reviewed to make sure they fit the needs of today's tenants (80 to 100 ft. are often the best for small shop space). Small shop spaces that resemble bowling alleys may be difficult to lease and should be avoided or at least have a discounted purchase price. Likewise, either avoid or heavily discount hidden space in the "crotch" or middle of the center, as this space may lease at lower than market rents or possibly never lease at all.

The biggest costs to the landlord in a center are the replacement of the roof and parking lot. Have these inspected by a reputable consultant specializing in those areas during the physical inspection period. If the replacement of the HVAC units is the Landlord's responsibility, these should be inspected at the same time. Environmental inspections are key to obtaining financing and avoiding future liability. Properties with a dry cleaner with a processing plant on premises or a gas service station on an outparcel should be reviewed very carefully. In addition, add the costs for any new or improved signage, lighting and landscaping into your initial budget.

Often investors look at a vacant store or "large box" for upside in the property. Make sure that the property is in a location that will attract such new tenants, that the number of parking spaces is sufficient and determine if the market rent will be enough to make the renovation viable. Make sure all financial projections include costs to demise the stores, to split all utilities and HVAC systems, to add ADA compliant restrooms and to modify the signage and storefronts. Remember that most drug store chains now desire free-standing stores on outparcels with drive through windows. An in-line drug store will most likely be vacant when the initial lease term expires.

Financial Concerns

When buying a shopping center, verifying the rent roll is crucial. Read all leases for anything that may limit the upside in the property. Look for termination or cancellation rights, co-tenancy rights giving the tenant the right to leave or to only pay percentage rent if an anchor tenant were to leave. Co-tenancy is becoming a bigger issue with so many anchors or large space users willing to go dark or move to larger stores. Use restrictions contained in the lease, through deed restrictions or through a reciprocal easement agreement with an anchor tenant may preclude the landlord from leasing vacant space to certain viable tenants. Tenant exclusives should be reviewed for this same reason. Also, review all lease renewal options since options with stated below market rents can limit the upside in the property for many years to come.

The lease expiration schedule should also be reviewed in detail along with any caps or limitations on common area maintenance costs (CAM), insurance and tax recoveries or reimbursements. Pay close attention to the definition of the tenant's responsibilities for CAM, particularly as it pertains to the pass-through of repairs and replacement of the roof, parking lot and structural elements of the building. Adjust your projections if these items cannot be reimbursed. Additionally, the projections should accurately reflect any leasing commissions, tenant improvement costs or landlord contributions necessary to attract new tenants at the time a new lease is signed or an existing tenant is renewed.

If the current mortgage is being assumed, make sure that there is positive leverage, when the loan constant is greater that the cap rate or current return for the property. Likewise, look at the loan prepayment or yield maintenance requirements that may impact the proceeds received from the sale of the property. After reviewing more than 300 properties per year and seeing extreme differences in the caliber of those in the brokerage community selling shopping centers, we see these possible pitfalls almost daily. Again, doing the proper upfront analysis and due diligence should help the property maintain its value for many years to come.

Good News for Small Centers - Convenience is Still King

Appeared in Carlson Reports, April, 2000.

By Robert H. Glaze

Over the past year, many news reports and articles have been extremely negative about the shopping center industry in general. There is a great concern nationally over the considerable overbuilding of power centers and "big box" retailers, which has resulted in more retail space per capita that ever before. Rising consumer debt, increased competition and sluggish retail sales, despite low unemployment and moderate interest rates, have resulted in the numerous retail bankruptcies. Several chains are struggling, and the shakeout in the electronics segment continues. Other retailers, particularly those in the apparel segment, have closed stores and pulled out of entire markets to cut losses in unprofitable locations. There is also concern over the long-term impact of home computers, catalogs and television shopping.

These concerns have given shopping centers the distinction of being the riskiest investment category among all property types in the eyes of many investors. Today, the retail market is viewed in the same way the office building segment was in the early '90s. Following the negative press, mortgage lenders in particular have become more cautious in lending on shopping centers, resulting in higher spreads and much tougher underwriting standards. As the cycle bottoms out, there will be many investment opportunities as values decline and institutional owners, particularly the life insurance companies, sell off their shopping center assets.

Despite these concerns, one of the best investment opportunities continues to be the strong, well-located convenience or neighborhood center. These properties are often anchored by a drug or convenience store, but are often unanchored. (In many instances the small shop space located next to a larger grocery store anchor that owns its own store or whose store is owned by a triple-net lease investor fits the definition.) Properties with the strong real estate fundamentals of having the benefit of an anchor, ample traffic and support of the surrounding market are flourishing and should continue to do so in the coming years, despite what happens with other shopping center types. Infill sites in urban areas, as well as strong suburban sites with limited competition, have the best occupancy levels, demand the highest rents and command the highest sales prices.

Passed By Overbuilding

In recent years, the thrust of new retail development has been in power centers and build-to- suits resulting from the expansion of national retail chains into new markets. This unbridled retail development has tended to bypass smaller centers. They typically attract destination-oriented convenience or service tenants as opposed to fashion or apparel retailers, which typically seek location in larger community or power centers and regional malls. While the "big boxes" battle it out the smaller centers enjoy strong occupancy, good demand for space and increasing rents.

Don't forget that convenience is still king. People are working harder, while wanting more leisure time. A working woman would prefer to run into the neighborhood convenience store for a carton of milk rather than hassle with a superstore in a large power center. People still need to have their clothes dry-cleaned, have their hair cut, buy their coffee on the way to work, pick up dinner or buy an ice cream cone for their children. These activities and services can be easily done at the neighborhood center and are not available on the Internet, through home shopping or through catalogs.

No Shortage of Tenants

Small shop space in well located centers should remain in short supply. More national and regional chains are looking to expand, as evidenced by the nationwide expansion of the bagel restaurant chains. In addition, there are many new retail concepts and expanding retail franchise opportunities each year. As more people leave corporate life to pursue entrepreneurial interests, many new start-up businesses will be looking for space. Credit quality becomes an important part of leasing space to smaller tenants and must be factored into any leasing decision. However, if a tenant in a small center leaves, it is far easier and less expensive to re-lease this space compared to re-tenanting a vacant "big-box" that has gone dark resulting in a major loss of cash flow and considerable tenant improvement costs and leasing commissions.

Money's There

Mortgage financing is currently available for the convenience and neighborhood center through smaller life insurance companies and local banks. However only the strongest properties attract these lenders. The mortgage conduits appear to be the most likely for this property type and have ample long-term money available. Non-recourse financing is available at attractive terms and amortization schedules, though spreads can be somewhat higher than those offers by the life companies.

As the retail market improves, the well-located convenience center will continue to be an attractive investment opportunity, particularly to the smaller investor who is not competing with the larger institutional owners. The main difficulty will be finding the right property as demand increases. The supply will no doubt be limited.

How to Sell a Center in Today's Market

Appeared in Carlson Reports, August, 1994.

By Robert H. Glaze

The health of the commercial real estate market has improved dramatically over the past year. Property values have stabilized and begun to increase in most areas of the country. With growing investor demand for new opportunities (particularly from existing and newly formed REITs), an increasing number of shopping center owners are putting their properties on the market.

As these projects are marketed, there appears to be a correlation between the size of the project and the sophistication of the sales process. Larger properties are marketed by national investment brokerage firms or Wall Street investment banking firms which typically provide the prospective investor detailed information and projections on the property. On the other hand, the sales process used by the majority of smaller center sellers is generally inadequate. It does not initially provide the prospective purchaser with the necessary information to make an intelligent decision, nor does the process always result in the highest sales price due to the broker selection process.

Based on the lessons learned in the '80s and forced by substantially stricter underwriting standards of mortgage lenders, today's shopping center buyer is smarter and, therefore, needs detailed information to make an offer and to find a loan commitment.

It is imperative that the seller provide detailed information and realistic projections in the offering materials. Some suggestions as to what should be included:

The Package should contain pictures of the entire center, a site plan, an area map and demographics showing population, households and a description of the trade area and corresponding income levels. A detailed description of the center including parking ratios, visibility and access, year of completion and construction materials used is highly desirable.

A detailed rent roll must show the current rent per square foot on an annual basis, square footage, description of each business, lease commencement and expiration dates and the amounts and dates of any rent steps or CPI increases by tenant. CAM and tax pass-through information should also be included, along with a detailed summary of the landlord's responsibility for operating expenses and capital expenditures. CAM caps or offsets; percentage rent provisions including breakpoints, offsets and historical sales per square foot by tenant; remaining free rent in the leases; kickout or cancellation provisions, or any item that affects the economics of the property should also be spelled out in detail.

The financial projections should include a reasonable vacancy and credit loss provision in the five to ten percent range depending on the center and market conditions. Vacancy and credit loss provisions can be excluded for strong credit anchors. Expense projections should be realistic and based on historical operating expenses and year-to-date actuals. The offering materials should include a line-by-line operating expense budget for the current year as well as historical operating expense information. Tax projections should be based on the anticipated sales price. Non-reimbursable general and administrative expenses that cannot be passed through to the tenants should be included as an expense to the landlord, along with a market management fee (unless otherwise stated in the leases) and a capital expenditures reserve in the $.10 to $.20 per square foot range, depending on the age of the property and the landlord's obligations for the roof, parking lot and structural replacements. If market rents have dropped over the past few years, the projections should reflect lower rents as leases roll to market.

I also recommend hiring a qualified broker who specializes in selling shopping centers on an exclusive basis. The broker should provide the seller with an estimate of value based on recent sales comparables and market information, should read the leases and prepare the financial projections and offering materials and develop a target list of principals known to have an interest in the type and size of property. He should distribute all offering packages, negotiate and present all offers to the seller and provide information to the buyer during the due diligence process.

When the seller uses an exclusive broker, he can control the sales process, the dissemination of confidential information and reduce the risk of future commission disputes. If an exclusive listing is not given, a large number of brokers nationwide widely distribute offering packages in the hope of obtaining a share of a large commission. In this case, information is normally outdated and widely disbursed resulting in the properties becoming "shop worn." Higher values are often realized when a more controlled sales process is used. When all key information is presented in the initial offering, eliminating any big surprises, there is a less likelihood that an offer will be made and then renegotiated once the buyer begins the due diligence process. Also, sophisticated investors will generally become more excited about a property if they believe they are one of a select few to bid.

These thoughts may seem basic. But it is astounding how many sales packages lack the necessary information and projections for the intelligent buyer to make a decision. By making detailed and thorough information available in the original offering materials and by including assumptions in all projections, a well organized, controlled sales process will result in greater credibility to the buyer and the likelihood of a sale being consummated will be greatly enhanced.

Weybridge Capital Investors Enters Columbus Market with Shopping Center Acquisition

Chicago, IL (October 23, 1998) Weybridge Capital Investors, Inc. has acquired the Village Square Shopping Center in Dublin, Ohio. The Chicago-based commercial real estate investment, management and syndication firm purchased the shopping center for $4,075,000 on behalf of Weybridge-Village Square, L.L.C., an affiliated entity.

This 70,050 square foot neighborhood shopping center, located at the intersection of state route 161 and Riverside Drive, is anchored by Capriano's, a 15,245 square foot specialty grocery store. Village Square Shopping Center includes 15 other tenants such as Dick Blick Art Supplies, WFS Financial, Radio Shack, Tim Horton's Restaurant and Fifth Third Bank. The Village Square Shopping Center was built in 1981.

"This is an outstanding location in one of the fastest growing communities in the Columbus market," said Robert H. Glaze, president of Weybridge Capital Investors. "We are planning a major renovation and redevelopment of the property. We are very excited about our first acquisition in Columbus and the potential growth of this market."

CB Richard Ellis Inc. of Columbus represented the seller, Adirondack SCI Limited Partnership, in the transaction and will be responsible for the leasing and management of the property.

Weybridge Capital Investors, Inc. specializes in real estate investment, management, and syndication. Formed in 1993, the firm also provides due diligence and acquisition consulting.

Back to Top