A North American affiliate of Israel-based Mishorim Development Group paid $6 million on June 16 for its second retail center in Orlando and is scouring the area for more high-vacancy retail this year, the company's director of acquisitions told GrowthSpotter.
"We're a private equity fund looking for value-add properties with vacancies of 20 percent or more, preferably in the Southeast United States," said Jeremy S. Foley on Wednesday. "Returns we see there are higher than those we see in Las Vegas or California. This is our second acquisition this year and we're constantly looking for new deals.
"Greater Orlando is a high target market for us, near top of the list," he continued. "We have $30 million I can spend right now (on future acquisitions)."
Located on the northeast corner of the E. Colonial Drive/N. Semoran Boulevard intersection, the East Orlando Shopping Center is anchored by Bravo Supermarkets and Florida Career College. The 10.2-acre property features two additional parcels totaling two acres that are on ground leases.
The property, with a 40 percent vacancy rate at time of acquisition, was bought free and clear of existing debt by affiliate Mishorim Gold East Orlando L.P.
Operating through Mishorim Gold USA and Gold US Investments, Inc., the private equity group develops property and owns income-producing real estate, hotels, and tourism properties in Canada, Israel and across the U.S.
This is Mishorim's second Orlando-area acquisition, its first being the Terrace at Florida Mall retail center on Sand Lake Road, bought in 2013 for $8.25 million.
Looking forward, Mishorim favors properties with vacancy rates of 50 percent or more, 150,000 square feet at minimum and going-in Cap rates of 6 percent or higher, Foley said.
"We'll look at secondary markets or higher occupancy numbers," he continued. "Anchored shopping centers are ideal because there's a traffic generator built in, but in Orlando we'll look at smaller deals, say 25,000 to 75,000 square feet. We have an appetite for Orlando now, like many do, and one of our principals lives there now."
Mishorim sourced a $3.9 million loan from CenterState Bank to help finance the purchase.
HFF Orlando's investment sales team represented the seller, publicly traded REIT Kimco Realty Corp., and was led by senior managing director Brad Peterson and associate director Whitaker Leonhardt.
The sale is a strong indicator of the depth retail investors will go to for value-add infill opportunities, Leonhardt said. The asset drew nearly a dozen groups that submitted offers, but Mishorim was chosen based on their competitive terms and track record of buying from public companies.