Attractive financing options are luring wealthy investors to test the real estate market. SHOP Cos founding partner Tommy Tucker tells us some of these new real estate investors are jumping on retail projects he and colleague Tim Axilrod have sold. Seeking diversified yield, more investors that are new to real estate are turning towards retail, particularly multi-tenant retail (versus compressed yields in single tenant retail), for cash flow and perceived ease of management, Tommy tells us. Financing options create solid leveraged returns for investors, he says.
For example, Stone Oak Square (pictured), a 16k SF fully occupied shopping center in San Antonio, was originally marketed for sale with a loan assumption in place. That loan was onerous compared to market alternatives, but required a massive penalty to pay off. As the market strengthened (both pricing in favor of the seller and loan terms attractive to the ultimate buyer), the buyer was able to pay in excess of list price to effectively pay the cost of the seller's loan penalty. That wouldn't have been possible six to 12 months ago and beyond, Tommy says.
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