Private Capital to Multi-Tenant Shopping Center Continues to Increase

Posted on October 15, 2019

Net-lease multi-tenant retail properties are becoming the fastest-growing segment of private capital investment in commercial real estate. Some of the key factors driving this trend include strong property fundamentals, historically low interest rates, low supply and similarly low property management requirements. Not only do these properties help investors diversify their portfolios with the benefit of historically positive yields, but the size of these deals typically, below $20 million, offer an array of affordable buying opportunities with less competition from institutional investors and publicly traded REITs, which have to answer to their shareholders and lack the flexibility make deals happen.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What is Cash on Cash Return?

Posted on October 09, 2019

In real estate, the cash-on-cash return helps property owners measure cash-flow on a pre-tax/after-debt services basis relative to the owners’ invested equity. It can be used to gage investment performance and forecast projected earnings and expenses in the future.

While this metric assesses the potential cash distributions over the life of an investment, it focuses on return for specific periods, such as the current year or quarter. Therefore it is especially important for owners who plan, expect or need to live off the income from their investment property over a long period of time. When commercial real estate investments involve long-term debt-borrowing, the actual cash return will differ from the standard return on investment ROI. Calculations based on standard ROI take into account the total return on an investment. Cash-on-cash return, on the other hand, only measures the return on the actual cash invested, providing a more accurate analysis of the investment’s performance.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Etailers Get Physical, Change the Leasing Landscape

Posted on October 02, 2019

Purely digital, online businesses once praised (and condemned) for disrupting the traditional way consumers buy and use goods and services are increasingly going old school, opening physical brick and mortar stores in shopping centers across the country. The reasons for this shift go back to basic sales 101 strategies, including increasing brand awareness, building stronger connections with customers and providing inherent value by allowing customers to physically touch and evaluate products at the point of sale, which can help reduce the returns.

While established brands will continue to seek out long-term leases, shopping center owners looking to fill vacant property should be flexible when working with digital native tenants that often prefer leasing space for five years or less. Even with these shorter term leases, property owners can realize long-term benefits, such as attracting traffic to their properties and creating a buzz that will keep consumers and other tenants coming back again and again.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What are Retail Properties and What Benefits Do They Provide to Investors?

Posted on September 28, 2019

Retail properties include a broad range of large and small malls, power centers with big box anchor tenants, strip shopping centers, individual stores and pop-up shops that market and sell a broad range of goods and services to consumers. Retail tenants can include clothing and accessory stores, grocery chains, pharmacies, convenience stores, gas stations, restaurants and even banks, emergency medical care providers and locations where consumers can pick up or return online purchases. In the current environment, a retailer’s flexibility and adaption to change are keys to their success. However, for investors, retail properties continue to deliver the same three benefits they have for many years, including the following:

  • Steady income stream with high yields. Retail properties provide investors with a reliable income steam, in the form of monthly tenant lease payments, rather than capital gain growth, which relies on the property increasing in value over time.
  • Long leases. Lease terms of 10 years with annual rent increases are common in the retail space, providing investors with the security that they will continue to receive monthly rental payments and not be faced with frequent vacancies.
  • Low maintenance. Retail leases are commonly net leases that require tenants, rather than landlords, to cover the costs of property repairs, maintenance, utilities, insurance and taxes.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Assessing Gross Income vs. Net Income in CRE

Posted on September 18, 2019

Commercial real estate brokers and sellers often promote the gross income that an owner can reasonably expect to receive from an investment in a particular property. However, different sellers use equally diverse methods for calculating this figure with varying degrees of detail. Not only do investors need to dig deeper to get a full picture of expected returns, they should also take into consideration the actual and projected expenses required for managing that property. For example, are investors responsible for property taxes, insurance and utilities, or are those expenses the responsibility of the tenants? Does the property need improvements now or in the future? The best way for investors to get answers to these questions is to work with experienced real estate professionals.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What Do Bank Consolidations Mean for Commercial Real Estate Investors?

Posted on September 10, 2019

The pending merger between BB&T and SunTrust banks represents the largest banking industry deal since the start of the “Great Recession” in 2008 and a potential signal that more consolidation could be on the horizon. The combination of these two southeastern U.S. banks brands will create the nation’s sixth-largest bank holding company and result in a significant number of branches closing or being sold off. Rather than wringing their hands over the loss of good quality tenants, property owners and investors should instead focus their attention on repurposing those prime locations for other tenants and uses as well as potentially longer lease terms and higher rents. Examples include food and restaurant services, pharmacies and convenience stores or even urgent care centers and healthcare clinics. Investors can more easily adapt to industry consolidations and turn those potential lemons into lemonade when they work with commercial real estate professionals with local market knowledge, deep relationships with a national network of potential replacement tenants and the experience to build-out, repurpose and market properties for other uses.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What Does the Fed’s Interest Rate Cut Mean for Commercial Real Estate?

Posted on September 06, 2019

On July 31, the Federal Reserve Bank announced its first interest rate cut since 2008, leaving investors to wonder if this is the beginning of the end of the decade-long economic expansions that has helped fuel investment in commercial real estate (CRE) and appreciation in property value. According to the Fed chairman, the quarter percentage point reduction represents a precautionary measure to support and sustain already favorable economic conditions, including GDP growth, historically low unemployment and strong consumer confidence.

For commercial real estate investors and property owners, the reduction in the federal funds rate will have minimal impact. On one hand, minor changes in already historically low interest rates will not necessarily impact real estate values. On the other hand, signs of global uncertainty can help to boost international investment in U.S. commercial real estate, giving owners of long-held property a timely opportunity to sell appreciated assets and use the proceeds to reinvest in newer property in booming areas.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

The Positive Impact of Ecommerce on Restaurants

Posted on August 29, 2019

At a time when pundits are blaming e-commerce for the rash of retail store closings, the Internet of things is fueling new growth opportunities for businesses in the food and beverage industry.

According to the National Restaurant Association’s 2019 State of the Restaurant Industry, customer-facing technologies, such as online and app ordering, mobile payments and efficient pick-up services, are enhancing the importance of brick-and-mortar locations, driving traffic and bolstering positive in-store sales growth in 2019. Moreover, the annual report found restaurant operators, in general, to be more optimistic about both sales growth and the economy in the months ahead. However, to keep up with consumers’ increasing demands for convenience and delivery services, forward-thinking chains and independent restauranteurs will need to rethink their sales strategies. They may consider partnering with third-party delivery-service companies, such as Postmates, DoorDash and Uber Eats, add more delivery-friendly menu items and/or they may need to repurpose their stores and parking lots for easier ordering and quicker pick-up services.

Currently, only 5 percent of all food and beverage purchases occur online, but that number is expected to grow. CRE investors need to understand which chains and locations are best prepared to leverage these opportunities in the future.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

 

 

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