CAMARILLO VILLAGE Square
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Reduced our basis by ≈ $4.875M by executing the sale of a pad at a 4.35% cap, and $1,043/foot.
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Acquired a national brand ACE Hardware,
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Transformed property from a pre-purchase of 87% lease percentage w/22% restaurants and fitness centers (which in 2021 were negatively affected by the pandemic) to nearly 100% occupancy in less than 2 years.
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Increased NOI of the property by 33%.
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On a project level, achieved a 38% IRR.
The Opportunity
Milan Capital Management purchased Camarillo Village Square, a 242,000-square-foot grocery-anchored shopping center in May of 2021, in the midst of the pandemic. The center stood at around 87% occupancy with 22% of the square footage occupied by either restaurant or fitness center tenants, nearly all of whom were negatively impacted by the COVID pandemic. Moreover, at a time when most of the investment community was hesitant to make any significant investments in retail centers Milan Cap. realized this was an investment opportunity that would benefit its investors.
The Project
Utilizing its extensive experience with design elements and value-add management for retail shopping centers, Milan redesigned the project significantly. The property underwent significant changes. First, when Milan Cap. acquired the property we concentrated on what was considered an "unleasable" portion of the center and relocation of a Rite Aid which occupied a larger than prototypical space of around 24,000 square feet. Milan Cap. recognized Rite Aid would benefit from a smaller space and a better location in the shopping center.
The Results
Rite Aid was relocated from 24,000 square feet space to a more desirable 14,000 square foot space adjacent to Sprouts Farmers Market. Following the relocation, Milan Cap leased Rite Aid’s prior space with a turn-key built Ross Dress for Less store. which was delivered on time and on budget, bringing the center to around 93% occupancy and adding substantial credit to the asset. In other areas of the center, within the first 6 months of ownership, Milan Cap. executed the sale of a Starbucks/Urgent care pad at a 4.35% cap, and $1,043/foot, reducing our basis by about $4.875M.
Additionally, Milan Cap. was able to lease what we considered the most "unleasable" portion of the center to ACE Hardware, and filled nearly all of the final few spaces with strong local operators, bringing the center to nearly 100% occupancy in less than 2 years, and increasing the net operating income of the property by 33%. We also worked diligently to extend the leases of many of the larger credit tenants at the property, bringing the weighted average lease term of the asset to more than 7 years.
Camirillo Village Square was sold on February 10, 2023 to an exchange buyer who recognized the value that Milan Cap. had created and appreciated the stability of the asset, as well as its potential for long term appreciation through a parcelization strategy which we were implementing. The new buyer will be retaining Milan Capital Management as the property manager and we couldn't be prouder of the success of this project and our new partnership.
