When they came to the Thomas Duke Company, the owners of the Pine Ridge Shopping Center were frustrated—understandably. Their 37,725-square-foot retail plaza hadn’t returned anything on their investment in years. Occupancy was only 59 percent, and almost a quarter of the tenants were in arrears. In fact, overdue rent payments totaled more than the gross rents budgeted for the current year. Plus, just over half of the tenants’ leases were due to expire in less than a year with the rest stringing along on month-to-month leases.
The owners had left this property in the hands of the same management and brokerage firm for more than 10 years. They knew they had little to lose by contracting with a new one. But they didn’t suspect how much they had to gain through the services of the Thomas Duke Company.
Our first step was to meet with the ownership several times to determine their objectives for this non-anchored, neighborhood shopping center in Novi, Michigan. These included not only setting a new direction for the center, improving its efficiencies, and increasing its income, but also repositioning it for sale in approximately three years.
We took 60 careful days to evaluate the market and consider various management strategies. Then we presented the owners with our best plan to meet those objectives. In January 2013 they awarded us the contract to manage the property and the leasing activity.
In less than two years, we’ve turned this slow-trickle stream of an investment property into a healthy river. Here’s how:
Today, 87 percent of the spaces at the Pine Ridge Shopping Center are occupied, all by paying tenants. Operating expenses are 20 percent lower, including insurance premiums that are 19 percent lower without compromising coverage. Our renegotiation of the mortgage freed capital for the roof, parking lot, and HVAC unit upgrades, yet still resulted in lower monthly principal and interest payments.
In dollar terms, this means a projected net operating income of $441,339 in 2015, a distribution of $100,000 to the owners in 2014, and not least of all, an increase of $1.5 million in the shopping center’s value over the original purchase price.
The result: very happy owners.
The Thomas Duke Company can turn your investment into a great investment. Our property management team understands the value of a strong relationship and will work with you to provide best-in-class services to help your property achieve better-than-average net operating income. We’ve developed a system to increase market exposure, retain tenants, apply financial models and create operating efficiencies in every expense category. We make every square foot count.
To put our tested and proven property management approach to work for you, call John M. Bridges, CPM, the Thomas Duke Company’s Director of Management Solutions, at 248-476-3700.
