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Appreciation post: the broker who told me to walk away from a $1.2M strip mall on Federal Blvd
Last spring a broker I barely knew told me to pass on a 6 unit strip mall near Federal and 72nd because the anchor tenant's lease had a co-tenancy clause he thought was a trap. I almost signed anyway since the cap rate looked great at 7.5%, but he pushed me to have a lawyer read it, and sure enough the clause let that tenant bail with almost no penalty if the gym next door ever closed. Did anyone else dodge a bad deal because of one line buried in a lease?
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paigep2016d ago
Man that broker got lucky and you're giving him way too much credit lol. A 7.5 cap on a strip mall is solid and co-tenancy clauses are in like every retail lease out there, they're not some secret trap. Sounds like the gym was probably fine and the anchor tenant just wanted an out if things went bad, which is normal stuff. You walked away from real cash flow over a what if that might never happen, and now somebody else is cashing those checks every month. Sometimes the "safe" move is just the scared move.
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