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Retail-to-Industrial Property Transition


Atlanta, GA

RRA Capital orchestrated the transformation of an Atlanta, GA property from a retail power center into a thriving industrial facility. RRA provisioned a first-position secured loan amounting to $12,445,000 supplemented by two extension options. With strategic investment from the sponsor, the property underwent a remarkable transformation, achieving exceptional occupancy rates and showcasing promising market indicators.

Formerly a retail center anchored by Wal-Mart and Home Depot, the property underwent a substantial land use zoning change to accommodate industrial purposes. The sponsor invested over $5 million in the property's transition and lease-up process. At closure, the property boasted an impressive 88% occupancy rate, with six tenants already in place. The rapid leasing progress, transforming from approximately 30% to 88% occupancy during the diligence phase, signified the property's desirability and strong market demand for industrial space in the area.

The remaining weighted-average lease term of 5.1 years for existing tenants provided stability and mitigated turnover risks for the sponsor. The submarket's favorable 4.7% vacancy rate and 6.4% quarter-to-date rent growth highlighted the area's robust demand for industrial space, ensuring attractive rental income potential.

In addition to leasing the remaining vacant space within the main building, the sponsor explored independent leasing of excess parking areas. This strategic move aimed to capitalize on specific tenant parking needs and meet the demand for additional parking in the submarket, enhancing revenue-generation opportunities.

Armed with a favorable market outlook, extended lease terms, and revenue-maximizing strategies, the property is poised for long-term profitability.

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