At Colonie Center

At Colonie Center (the "Property") is a 243,389 square foot retail center anchored by Whole Foods, Floor & Décor and TJX's Sierra Trading Post with triple net leases extending over ten years. These anchors, in addition to the Bank of America outlot (15-year lease), comprise 64% of the in-place Base Rent. This high visibility center occupies the most desirable retail location in New York's Capital Region. While in-place anchors provide for downside protection, significant leasing opportunities provide for upside potential. Experienced Sponsors will be co-investing approximately 29% of the total deal equity.

Summary:

At Colonie Center offers investors the opportunity to invest in a well-located, grocery-anchored retail center in Albany, NY, with strong anchor tenants and significant upside potential. The experienced sponsor, Heidenberg Properties Group, is co-investing a substantial equity stake, demonstrating commitment and conviction in the investment. While the retail sector's challenges and the reliance on anchor tenants present risks, the strategic location, upside potential, and compelling risk-adjusted return profile make this investment an attractive option for investors seeking exposure to the retail real estate market.

Bull Case:

• Strong Anchor Tenants: The presence of Whole Foods, Floor & Decor, and Sierra Trading Post as anchor tenants provides stable and durable income with triple net leases extending over ten years, covering 64% of the in-place Base Rent.
• Prime Location: The center's strategic location at the convergence of Albany's key retail corridors and its proximity to I-87 ensure high visibility and foot traffic, attracting premier tenants and shoppers.
• Upside Potential: Significant leasing opportunities, particularly the lease-up of 94,000 square feet of upper-floor space, present a potential for value-add and upside in cash flows.
• Experienced Sponsor: Heidenberg Properties Group brings nearly four decades of expertise in retail investment and development, adding confidence in the successful execution of the business plan.
• Compelling Risk-Adjusted Return: With a targeted IRR of 16.7% and a targeted average cash-on-cash return of 8.8%, the investment offers an attractive risk-adjusted return profile.

Bear Case:

• Retail Sector Vulnerability: The retail sector faces challenges from e-commerce competition and changing consumer behaviors, which could impact foot traffic and tenant stability.
• Dependence on Anchor Tenants: While the anchor tenants provide stability, the property's financial performance is significantly reliant on them, posing a risk if there are any changes in their business.
• Lease-Up Risk: The success of the investment is partly contingent on the lease-up of vacant space, which may be impacted by market conditions and tenant demand.
• Interest Rate Risk: The use of debt financing exposes the investment to interest rate risk, which could affect the cost of capital and overall returns.
• Exit Strategy Risk: The targeted hold period of 5 years and the exit cap rate assumption of 7.45% may be subject to market conditions at the time of sale, impacting the realization of targeted returns.

  Important Disclosure: The information presented in this analysis is provided by RealtyMogul and Heidenberg Properties Group and has not been independently verified by Benzinga. This analysis is for informational purposes only and should not be construed as investment advice. Investors are advised to conduct their own due diligence and consult with a financial advisor before making any investment decisions. Benzinga does not endorse or guarantee the accuracy of the information provided in this analysis.