Patience, preparation, and one clause that changed everything.
The Setup
In 2019, we acquired a shopping center at an 8% cap rate based on a conservative assumption.
We assumed we would never redevelop one of the underperforming big boxes. We hoped we might. But we did not underwrite it.
The tenant paid roughly $2.00 per square foot. They controlled the site through long-dated options and renewal rights. They held multiple five-year options.
If they wanted to stay, there was very little we could do about it.
So, we built the deal around what we knew, not what we wished for.
We underwrote a $500K termination payment. Not because we expected to use it, but because it was the only obvious path to upside.
On paper, it was a clean deal. Stable income. No redevelopment risk. Nothing flashy. Just block and tackle execution.
The Twist
Our leasing team did not see a “stuck” box. They saw demand.
National retailers. Credit tenants. Real interest from brands that could elevate the profile of the property.
In early Q4, we made an unsolicited offer to buy the tenant out for $500k.
They laughed. No counter. No discussion. Just no.
A month later, with momentum building behind the scenes, we went back in person with an offer for $750K.
Same response. Hard no.
At that point, most people would have checked the box and moved on. We did not.
The Curveball
About a month later, the tenant issued a press release to the market. A mass store closure. Over one hundred locations.
Ours was on the list.
At first, we were not sure if this helped or hurt us. A closing store can lower their losses. It can also increase their leverage.
But as we prepared for the shutdown, we did what we always do.
We read the lease again. Slowly. Carefully. Line by line.
That is when we found it.
If the store went dark for 90 days or more, we had the right to recapture the space. No buyout. No payment. Full possession.
By then, we had four national tenants lined up. Each one contingent on a single thing.
Deliver the box.
The Decision
We could wait. We could posture. We could reopen negotiations and try to turn leverage into a new number.
Or we could do exactly what the lease allowed.
On day 90, we sent the recapture notice. We followed the lease document. We took possession.
Then we cleared contingencies for the 4 national tenants we had deals with. Permits started, then construction commenced.
From acquisition to possession took roughly 6-to-9 months.
A redevelopment we never expected was suddenly real.
The Outcome
The box came back at zero cost. The redevelopment moved forward. The center changed trajectory.
What started as a stable, low-risk deal turned into a transformational one.
Not because we pushed harder. But because we stayed ready.
Lessons Learned
Site control cuts both ways. Provisions that feel harmless in one market can define the entire outcome in another.
Business is run by people, not machines. Somewhere inside that organization, decisions were not being connected. They walked away from real money without realizing it.
Momentum creates leverage. We never stopped planning the redevelopment. The more progress we made, the more options we uncovered.
Closing Thought
Sometimes the answer is not a better offer. Sometimes it is patience, preparation, and staying in motion long enough for the facts to change. I often use the sports reference “you have to hang around the hoop.”
Most people stop when they hear no. The real advantage comes from staying in the game.
—Chris
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