Shopping Center Business

MAY 2018

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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SHOP ONE 132 • SHOPPING CENTER BUSINESS • May 2018 R etail centers, especially those an- chored by grocery stores, remain relatively immune to the shopping sea change brought on by e-commerce. That's an important thing to know about ShopOne, an owner, operator and manag- er of shopping centers that was formed in October 2017. ShopOne's strategy for growth is built on applying readily accessible capital — mainly through funds affiliated with investor Davidson Kempner Capital Management and a $400 million credit facility — to community shopping centers in dislocated markets. Its mission is to acquire, operate and manage grocery-anchored centers in densely populated markets across the country. Once acquired, ShopOne will use its financial flexibility, and growing and experienced team of people, to add value through repositioning the assets. These changes could include leasing refreshes, physical or aesthetic improve- ments as well as updating or altering store footprints and applying a more engaged property management strategy. CEO Michael Carroll points to McKin- ley Crossroads as an example of an ac- quisition that tics all the right boxes for ShopOne. The company acquired the three-build- ing property in Corona, California, its first acquisition in the state, in November 2017. Forty-seven miles southeast of Los Angeles, the location is just outside a gateway mar- ket. That's one of the boxes the company looks for. Population density and above-av- erage household income are others. "On the border of Orange and River- side counties, there is significant density around the asset," Carroll says. "There are approximately 287,000 people in a five-mile ring with household incomes approaching $90,000 a year. That is the type of asset we're looking for. We're also looking at quality assets that have strong ABR (annualized base rent) per square foot metrics and offer us some view of upside in a core plus type format." The company is looking to take advan- tage of dislocation in the retail market- place to acquire assets at attractive valu- ations to replacement cost so it can then enhance value through these operational and capital improvements. "We are looking to where there might be a vacancy created by a bankruptcy or a pad opportunity that we might be able to take advantage of to build a little more retail on the center," Carroll explains. "Or possibly some near-term, below-market leases where there's a re-ten- anting opportu- nity. What we're most excited about is the rel- ative dislocation that exists today in the space. We think that hav- ing capital and the ability to execute quickly with no financ- ing contingen- cies enables us to be very effective and hopefully pick up assets at nice cap rates. We've also Opportunities In Store With grocery-anchored centers in demand, ShopOne is poised for growth. Lynn Peisner and Randall Shearin ShopOne acquired McKinley Crossroads in Corona, California, in November 2017. It exemplifies the type of asset the company is seeking: just outside a gateway market, surrounded by density and above-average household incomes. Michael Carroll CEO ShopOne

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