What returns are LPs expecting on multi tenant retail?
Any LP groups here? I am just trying to figure out return expectations on multi tenant retail (2010 and newer). Everything I am looking at is trading around a 5 cap. Are LPs satisfied with this? Most of these deals are with franchised tenants or smaller operators, but in mid tier markets. I don't know what the IRR expectations have been lately. Its tough to get a 20%+ IRR on a 5 cap, where the rents are already market level and its hard to add more value.
Disclaimer* Im not in retail.
What waterfall economics are you using? I assume you're buying core - core+ centers if there is no value add or mark to market in rents. Maybe look at some more opportunistic deals.
To answer you question - a 17- 25% IRR sits the best with LPs.
Some of the opportunistic deals are priced at a 5 cap assuming market rent and occupancy. Even if I make improvements, the sales price is pricing it in.
so a 5% on proforma yr 1? whats the cap on t12
Omnis qui quae placeat qui. Enim incidunt qui dolore reprehenderit autem veniam voluptas. Aut accusantium repellat quia eum aut. Aut sint voluptatem illo explicabo quaerat minus labore cum.
Placeat qui id cupiditate laborum. Autem excepturi quae atque velit libero ea alias.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...