ACQUISITION & MANAGEMENT

SUWANEE JUBILEE
Suwanee, GA

Suwanee Jubilee is an upscale two-level retail center located in affluent Suwanee, Georgia. Anchored by the successful organic grocer Fresh Market, the center enjoys excellent visibility and access in a vibrant Atlanta suburb. The property contains 73,524 square feet of rentable square footage and is situated on approximately 10.9 acres. The property, constructed in 2006, is comprised of four (4) separate buildings, two (2) of which are multi-tenant buildings while the other two individually housea Fresh Market, a national credit rated grocery tenant, and a Cinco, an upscale southwestern cuisine restaurant with multiple locations in the Atlanta area. The balance of the tenant base currently in place includes medical offices, a beauty salon, a pizzeria, an interior design firm and a gift store.

  • Two-story retail center

  • Located in the heart of  downtown Suwanee, GA

  • 73,524 rentable square feet

  • Land Area:10.96 acres

  • Yea rBuilt 2006

OPPORTUNITY

The property was developed from the ground up by Paces Properties, an established and reputable real estate company headquartered in the Atlanta area, with such developments toits credit as Vinings Jubilee, a highly successful upscale retail property located in the heart of Vinings, an affluent Atlanta neighborhood. Completed in 2006, Suwanee Jubilee suffered from an unanticipated market downturn and as a result, was not able secure the leases necessary to service its debt from operations. Paces Properties had secured a construction loan for $10 Million originated by Synovus Bank, a note that was subsequently purchased by Rialto Capital in 2011. Rialto foreclosed Paces Properties to take fee simple title and proceeded to market the property for sale.

 

The property was approximately 62% occupied and generatedand annual net operating income of approximately $530,000. The property wasunder contract for $7.5 Million representing a per square foot purchase price of approximately $102. Anticipated closing costs and associated contingencies and fees yield an all-in purchase price of approximately $7.9 Million which equates to $108 per square foot. With the initialnet operating income, the acquisitionprovidedan entry capitalization rate of approximately 7% with a stabilized capitalization rate of approximately 12% upon stabilization.

 

VALUE OPPORTUNITY

  • Attractive Property Acquired60%Below Replacement Cost

  • Low Occupancy on in-place tenants of 62%

  • Competitive Advantage in Leasing Process Due to Strong Mix-In Place Tenants (generally driving higher income customer to shopping center)

  • Sophisticated, Upscale Feel Able to be Leveraged to Achieve Strong Results in Leasing Marketplace

  • Extended Lease Agreement with Fresh Market

  • Upside Via Leasing Vacant Space•Favorable Exit Valuation

 

Due to the up-scale architectural styling and appearance of the property, Urbana estimateda replacement cost, inclusive of the land value and building cost, of approximately $170 per square foot, which would yield a project cost of approximately $12.5 Million. The attractive basis in a property that was originally designed to house higher-end tenants provides the new ownership with a competitive advantage in the leasing marketplace in terms of providing strong value with a superior product. The property was designed as a higher-end lifestyle center and the architecture of the property. As mentioned above, the attractive exterior of the property creates a sophisticated feel to the shopping center that will be leveraged to achieve strong results in the leasing marketplace.With the 2-story, surface parking entrances in the back of the property, this provided a challenge in the lease-up but given Urbana’s experience in retail, prevailed,nonetheless. Another challenge was that it was difficult to find lending on 2-story retail as well but give deep relationships in the commercial real estate sector, Urbana was able to solidify proper capitalization to fund the project.

Supplementing Fresh Market, an up-scale, credit-rated, national grocery tenant, is a well-established local tenant base ranging from Medical Doctors to Interior Design that includes the casual upscale Southwestern, Cinco. The mix of in-place tenants drive a generally higher income customer to the shopping center which, paired with the attractiveproperty wide styling, will give the property a competitive advantage in the leasing process. At a basis of $108 per square foot net of acquisition and associated closing costs, the property wasable to compete on pricing with older and less attractive properties that had aless favorable in-place tenant base.

OPPORTUNISTIC SALE

Suwanee Jubilee ultimately realized an IRR of 75% when Urbana Holdings sold the property to Levy Properties in November of 2017-51months after its acquisition. Within that period the property recovered from a 38% vacancy factor, stabilizing at 100% occupancy and realizing its full capitalization potential. Having analyzed recent market trends involving organic specialty grocers that suggested future instability for the property anchor Fresh Market, Urbana decided to sell the property at the height of its profitability. Suwanee Jubilee was purchased by Levy Properties in late 2017 for over 14 million dollars-double its purchase price.