Southeast Investment Sales Monthly Newsletter | January

Monthly Insights into Capital Markets
SRS Real Estate Partners is pleased to distribute it’s monthly investment sales newsletter presented by the Atlanta Investment Sales Team, composed of Kyle Stonis and Pierce Mayson.

Turn Up the Sales Volume
The fourth quarter of 2012 turned into an end of year boon for retail investment sales as transaction numbers continued to easily surpass levels seen in 2011. In October alone, sales of significant retail assets rose 10% year-over-year to $4 billion. Taking out large entity-level transactions which occurred last year- such as Blackstone’s purchase of Centro’s US portfolio- year-to-date sales volume was up an encouraging 31 percent while average cap rates were down 10 basis points to 7.3%. With the continued lack of distress in the retail sector paired with an abundance of buyer appetite, investors continue to pursue class ‘B’ and ‘C’ centers with a more notable value-add component. All of this activity seems to be a function of low interest rates as well as motivation for both sellers and investors in regards to capital gains and general uncertainty about the economy and political outlook for 2013. In all, investment sales volume for the year had already reached $70 billion by early December, and with a month of end-of-year transactions having been finalized, it is a safe assumption that 2012 finished as a banner recovery year for the retail investment sector. Source: Retail Traffic

It Tastes Like Expansion
Chicken chains will continue aggressive expansion plans in 2013 as regional rivals look to establish themselves in new territories. Chick-fil-A looks to lead the way with 90 new locations this year, adding to its already 1,600 locations nationwide. The company posted in excess of $4 billion in sales last year which was a 13% increase from the previous year and a 7% increase in same-store sales. As it continues to expand into new markets, Chick-fil-A attracts an endless supply of new loyal customers. In Chicago, for instance, Chick-fil-A has taken the city by storm, as the product is unlike any other offered by fast food chains in the city and the quality and service are consistently excellent. Other chicken chains plan continued growth as well; Zaxby’s and Bojangles plan to add 40 new locations, Popeyes will look to grow by about 100 new locations, KFC will add 15 new stores, and Church’s will add upwards of 60 locations. Source: Crittenden’s Retail Space

Getting Top Dollar
Dollar stores continue to draw plenty of attention from net-lease investors, as cap rates have continued to compress for some of the top operators such as Dollar General and Family Dollar. With interest rates maintaining historically low levels, buyers are opting for dollar store opportunities in order to fill their queues. A lack of investment-grade assets has also pushed a myriad of 1031 Exchange buyers into the fray, causing cap rates to drop 126 basis points between Q3 of 2011 and Q3 of 2012; median asking cap rates for Dollar General stores were 8.25% while Family Dollars were 8.28% and average pricing for these assets has reached $103/SF. Source: Shopping Center Today

JUST SOLD
STNL Walmart Supercenter
Mobile, AL

ON THE MARKET
Shenandoah Plaza Neighborhood Center
146,121 +/- SF
Big Lots, Goodwill &
Dollar General
For more information
contact: Kyle Stonis

JUST SOLD
Washington Square Shopping Center
Gainseville, GA