Bruce Galloway acquired the Shops at Vistancia, a retail shopping center in Phoenix for $26 million. The center is part of a master planned community development and the only grocer serving the residential community within a five-mile radius.
Given the credit tenant profile of the rent roll, Bruce recognized a unique way to unlock value. Within six months of the acquisition, Safeway, Walgreens, and Chase Bank were subdivided into separate lots and sold as a separate horizontal regime for total proceeds of $25.6 million.
As a result, all of the initial equity basis was returned to the partners and the outstanding debt was paid off. This structured solution created a riskless ownership position on the remaining retail assets and provided consistent cash flows until final disposition. The transaction produced an IRR (internal rate of return) of nearly 40%.
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