FROM THE BLOG

Case Study: Horne Plaza

A Retail Center in Gilbert, AZ

 

Challenge

Close or don’t close a commercial retail strip center in Gilbert during the economic downturn. Horne Plaza, a 15,000 sq. ft. retail center in Gilbert was available for sale in 2012. The economy was still very soft and retail in Phoenix was not improving. Furthermore the center’s largest tenant Gilbert Center for Family Medicine was preparing to move. The largest challenge was to replace the 6,000 sq. ft. medical tenant. The second largest challenge was beyond the control of the buyer. Part of the center not for sale was a 60,000 sq. ft. former Albertsons Grocery store. The store was abandoned and there was no indication it would be replaced anytime soon.

Action

Omni One performed a value forecast for the buyer showing the center value based on a CAP rate five years in the future under a worst case, best case and most likely case scenario. Omni One also studied the retail market in the immediate area and discovered that many of the large vacant “Big Box” store locations that had been empty in the area were selling at a rapid pace. The buyer considered all of the research and made the decision to purchase what on the surface appeared to be a rather drastic situation.

Result

Omni One helped the buyer negotiate a favorable termination with the medical center leaving their lease early. Omni One was instrumental in completing a lease with a new medical office tenant. An investment group from Las Vegas purchased the old Albertsons location and leased the space to a new grocery chain. The owner successfully released a smaller tenant that was not paying rent on time and expanded the new medical tenant into their space. Cash flow of the property not only stabilized but grew with company guaranteed leases. The value of the building has improved exponentially with the buyer taking a risk but a calculated risk based on the Omni One’s work.

Testimonial

“The work and research provided by our Omni One helped us to make an informed decision on a complex and risky purchase. We believe we have substantially improved the value of the property by our purchase and hard work. The ability to pull the trigger on the purchase was promoted on the knowledge provided by Omni One.”

– Matt Garnett
Garnett Capital Corporation

 

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