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One of the time tested hallmarks of successful real estate developers and operators is the ability to create and maximize value of the assets they build, own, and acquire. Historically, these methods have been comprised of new construction, re-tenanting, and repositioning of centers. These aforementioned strategies will continue to be the bread and butter of their businesses. Due to an overall reduction in demand from retailers and the decline in market rents that many markets have experienced in the past few years, opportunities to create value for many companies has been limited. Facing a more challenging environment, real estate companies will need to get creative in order to find opportunities to maximize value. One commonly overlooked method that works in any market that can benefit companies in the near term is to capitalize on the arbitrage between shopping center and NNN investment CAP rates by selling the NNN outparcels to shopping centers.

Let’s take a look at a couple of examples:

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