ACQUISITION
A principal member of the team acquired an institutionally managed 703,201 SF portfolio of six neighborhood shopping centers located in the resilient New York State markets of Buffalo, Binghamton and Rochester. All of the shopping centers were anchored by a Tops Market (“Tops”), a private regional supermarket chain based in Buffalo, NY, which operated approximately 70 supermarkets and five franchised stores under the Tops Friendly Markets banner. Tops was formally owned by the Dutch grocery operator Royal Ahold who guaranteed the majority of the Tops leases as a condition of the sale of Tops business in 2007. The portfolio was formerly marketed during a period that was still feeling the effects of the economic crisis of 2008. The deal was awarded based on the recommendation of a senior manager of an international brokerage firm. The property traded at a mid-teens capitalization rate.

INVESTMENT PLAN
The plan was to negotiate early extensions of the Tops leases to secure 10+ years of term, and self-manage the portfolio, thus taking advantage of its critical mass to better focus on expense management and tenant retention; also, to select a leasing brokerage team that would employ an aggressive approach to pursue the re-leasing of the current inline vacancies, and aggressively market the seven outparcel opportunities on both a ground lease and sale basis.

RESULTS
The portfolio was bought well and generated high cash-on-cash returns. Tops agreed to renew two five-year options on all of its stores, providing an average term of its leases of 15 years, and also refinanced the portfolio based on a value 30% greater than the original acquisition price. The refinancing facilitated the buyout of an existing investor and the buy-in of a new investor to position the portfolio for future growth while still achieving a mid- to high teens cash-on-cash return. The former investor was shedding all properties that were not part of their core business and the partners worked together to achieve a win-win outcome. Tops Markets chain has grown by more than 50% since the property was acquired.