Wednesday, July 18, 2007

Shopping Center Investments

Article I just posted on

I have been helping investors either purchase shopping centers or exchange into them. My client base typically has built equity in a rental house or a small apartment building and are interested to ease management and increase cash flow. Multi tenant shopping centers are the best choice to preserve equity, lessen management and provide cash flow with stability. A fully occupied center in a strong market such as the Phoenix metro will cost $2-5M with an approximate 7% cap rate. This tends to be a fully occupied center with local, regional and national tenants. All tenants on NNN leases so the risk of expense fluctuations is borne by the tenants. Management fees are paid in the NNN charges also. This stable and strong situation is coupled with the cost of financing which may be 6.25% or lower for conduit 10 year money, some of which may have a couple years of interest only payments. Internal rates of return may be as high as 12% after tax. With housing growth continued to grow in that market (and many others), this is a great trade or purchase.

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