Retail commercial real estate is a great investment vehicle for many reasons, including:
- It is a very tangible asset that you can visit, walk around, and touch
- Each shopping center is unique and the real estate, by its nature, cannot be duplicated
- The health of the asset can be easily monitored by observing customer traffic, sales reports, and merchandise stock.
- Most leases are 5 years in length, which provides a long period of predictable cash flow
- Most leases are “net” leases, which means the tenants will reimburse the Landlord for real estate taxes, real estate insurance, and common area maintenance.
- Net Operating Income can be increased through proactive marketing to secure tenants faster, careful selection of a synergistic tenant mix to optimize sales volume, and expert maintenance of the property… basically, many factors that can be controlled by the owner/developer.
Saglo Development has owned, managed, and developed retail commercial real estate since 1976 which makes us very experienced. We have a strong balance sheet, aggressive leasing team and expert property management which make us very efficient in unlocking the potential value within each shopping center.
How we differ from many of the other syndications are that:
- We are a family company that has owned shopping centers in South Florida for over 35 years.
- We have a very experienced in-house leasing team that is capable of leasing any space in the fastest time possible for the highest attainable rents.
- Our in-house management team can address multiple crises situations simultaneously in a timely and efficient manner while making sure that all of our properties are in pristine condition.
- We are a low-leverage owner that typically finances 60% – 65% of the value of an acquisition. Having more equity in an asset and financing less increases the Cash Flow after Debt Service while also decreasing the risk of failure for the investment. Other syndications may advertise 18%-20% returns within 5 years, but often it is at the cost of high- risk in the form of high-leverage.
- We perform an extremely thorough analysis of each property that we make an offer to purchase. We perform 5 and 10 year cash flow analysis using ARGUS software as well as our own proprietary investment model.
- The information used for the analysis is based on our 35+ years of experience in owning shopping centers and being in Florida. The market leasing assumptions reflect the most plausible scenario with the highest chance of achievement due to the strong leasing background of the acquisitions team.
- We stress test our models so that even if we were to experience another economic catastrophe, we can still show positive cash flow.
- We conduct business using an “open book” so that all investors can see exactly how the cash is flowing to them.
Our acquisitions criteria are as follows:
- We will only purchase retail shopping centers
- We will only purchase in Florida
- Shopping centers will be at least 50,000 SF in size, except in Miami-Dade where they will be at least 15,000 SF
- There will be the ability to increase NOI within the first 5 years of ownership
The investment structure:
The investor will be a Limited Partner which will rely on Saglo Development (the General Partner) to professional manage the shopping center and add-value to the asset. The General Partner will not place any equity in the investment, but Saglo will invest at least 10% of the equity required as a Limited Partner, so that Saglo has “skin in the game.” Saglo will provide quarterly reports to the Limited Partners on the leasing progress and finances of the shopping center. All available cash to be paid to Limited Partners will be done on a quarterly basis. Each acquisition will have a different investment structure, but most of them will include:
- A Preferred Return (usually 8%), including catch-up
- A Cash Flow Split of 50%-75% to the Limited Partnership once the Preferred Return met
- Equity returned to the Limited Partners when the property is re-financed