Property Gallery 8 Photos

Shop Building Corner Storefront Service Tenants Medical Tenants Dining & Services Inline Shops Valley Parkway Location Overhead View

THE OPPORTUNITY
Long-Term Tenants, Below-Market Rents and 40% Vacancy

The Shops to Vons had the kind of tenant base most owners would want. About three-quarters of the tenants had been there for more than a decade, and most had renewed since 2019. The tenant mix was entirely service, child care, restaurant and medical uses, the kind of businesses that don't lose customers to online shopping. But the center was only about 60% occupied, and in-place rents were well below market.

The sponsor saw a clear path: invest in the property, fill the vacant suites and bring rents up to market. They had done it before. This was their second loan with RRA. They had bought their first property from the same seller, and within five months of that loan the building went from 44% leased to nearly full.

Patrick O'Donnell of Tauro Capital Advisors brought the deal to RRA Capital.

THE PROPERTY
Shop Space on Escondido's Main Retail Corridor

The property is the shop space of a grocery-anchored center at 2315-2369 East Valley Parkway, on the signalized corner of Valley Parkway and Citrus Avenue. Built in 1981, it's 37,575 square feet of single-story retail on 3.4 acres, next to a Vons that was recently remodeled.

• Traffic: More than 40,000 cars a day at the intersection, with six ways in and out
• Tenants: Domino's, dental offices, a child care center, a laundromat, salons and local restaurants
• Demographics: About 175,000 people within five miles, with average household income above $91,000
• Location: About 30 miles from downtown San Diego and 15 miles from Carlsbad

THE RRA SOLUTION
Acquisition, CapEx and Leasing Capital in One Loan

RRA provided a $5,900,000 non-recourse bridge loan with a two-year initial term and two 12-month extension options. The loan closed on February 4, 2022. Part of it funded at closing for the acquisition. The rest was a follow-on facility for capital improvements, tenant improvements and leasing costs, so the sponsor had capital ready to prepare vacant suites and sign new tenants. Most of the follow-on facility was dedicated to tenant improvements and leasing costs, putting capital right where the business plan needed it: filling the vacant suites.

THE EXIT
Repaid in About 18 Months

The sponsor repaid RRA's loan in full on August 2, 2023, about 18 months after closing and six months before the initial maturity date. The extension options were never used.