How to UW retail?
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Do you have any broker contacts in the area? They’ll give you all of the info you need and more because they’ll want the business.
No I don’t. and I don’t want to tip off any brokers just yet.
you need to use brokers. We buy and own a ton of retail and lean on brokers heavily for our UW. Our deals go well.
Awesome. Yes will loop in brokers later but for now just looking for a high level check on my assumptions / valuations. You said you buy and own a lot of retail, do you guys own anything in CO? What’s your gut check on what cap rates are in a market like Fort Collins or Boulder?
Thank you!
You can lean into appraisal teams too, we lean into them for operating comps all the time which you can use to get a good idea for typical operating margins for similar product in your area - basically exactly what you’re asking about.
They get how the game works and won’t be pissed if you don’t use them later on for an appraisal for one deal, but yeah don’t go to the same team 5 times asking for stuff and never give them the business. They’ll obviously have sale comps too if you’re thinking of that.
Don’t need to formally get in bed with brokers to do this stuff, these guys play a numbers game and get how it works.
Zero clue on Colorado. East coast based
High level check— I really can’t give you one. Idk market at all. If you really don’t want to use brokers - assuming you have rent roll/leases I’d gut check leasing assumptions vs what is there, given it’s your best comp.
You need to request DD on the retail. Leases, rent roll, T12, etc. Grind through the leases to make sure there are no termination options for the tenants. T12 should include CAM numbers. If you are just looking for estimates, download deal rooms from similar properties in the area to back into a CAM number. 5-10% vacancy seems about right, unless there are fewer than 3 tenants. I would mainly look into the weighted average lease term remaining. If a majority of the leases roll in the next 2 years, you will have to account for a higher vacancy or costs associated with extending the lease.
Cap rates are entirely property specific. Are the tenants credit rated or mom and pop? How much term left? Are rents above or below market? How is the access to the property? All of these play into that number so it would be hard to give you a back of the napkin. Happy to UW it if you DM me.
Whoever just commented, can you dm me? Mod team took your post down...
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