Distressed Retail Offers Investor Value-Adds

PALM BEACH, FL—MMG Equity Partners and Global Fund Investments acquired
Whitworth Farms for $11.2 million. The 88,424 square-foot Publix-anchored center is in Boynton Beach, FL.

Built in 2008, the center is located in a high-growth corridor on Hagan Ranch Road, just east of the Florida Turnpike, between Boynton Beach Boulevard and Atlantic Boulevard. According to MMG's research, 56,000 people live within a three-mile radius of the center, with an average household income in excess of $87,000.

“The center was constructed using the highest architectural and design standards providing great curb appeal,” MMG principal Gabriel Navarro tells GlobeSt.com. The fact that it is a newer Publix center in South Florida made it interesting on the surface.

The retail center is 71% occupied, with 20,000 square feet of small shop space and two outparcels available for lease. That, says Navarro, offers the potential for creating value over the medium- to long-term. And a household income of over $87,000 offers a desirable customer base. As Navarro sees it, all this, coupled with strong deposits at bank branches in the sub-market, makes the outparcels attractive to financial institutions.”

The joint venture acquired Whitworth Farms via short sale. Whitworth Farms to stabilization. But Navarro says deals like this one are getting harder to find in South Florida.

“Finding off-market, value-add opportunities that have the potential for creating value through localized hands-on management has certainly gotten more difficult,” he explains. “Most of the distressed retail product is in the hands of the special services who for the time being appear to prefer to hold the assets.”