Milan Capital Management is a privately held real estate investment company based in Anaheim, California that specializes in the purchase, development, and management of commercial properties in California and other western states. Our focus has been on identifying unique opportunities in the marketplace, and adding value to these investments through proactive leasing, management, and development strategies. We work with high net worth and ultra-high net worth investors to add both diversification and outsized returns to their investment portfolios. Our latest “round trip” investment is a good example of the way we can deliver investment results.
We are pleased to announce the sale of Camarillo Village Square, a 242,000 square foot grocery anchored shopping center, for $83,595,000. In a very short period of time, we were able to deliver a tremendous result for our group of high-net-worth investors.
We originally acquired this center in May of 2021, in the midst of the pandemic, for $61,000,000 at around 87% occupancy. 22% of the square footage here was leased by either restaurant or fitness tenants, nearly all of whom were on COVID relief, and most of the investment community was scared to make any big bets on retail at the time. We were able to bring nearly all of those tenants back to paying full, contractual rent by Q4 2021, exactly in line with our underwriting.
Within the first 6 months of ownership, we executed the sale of a Starbucks/Urgent care pad at a 4.35% cap, and $1,043/foot, reducing our basis by about $4.875M.
For years, Rite Aid had been occupying a larger than prototypical box of around 24,000 square feet, and at acquisition we took over the relocation of this tenant to a 14,000 square foot box adjacent to Sprouts Farmers Market. Following the relocation, we backfilled Rite Aid’s space with a turn-key built Ross, delivered on time and on budget, bringing the center to around 93% occupancy and adding substantial credit to the asset.
Additionally, we were able to lease what we considered the most “unleasable” portion of the center to ACE Hardware and filled nearly all of the final few shop spaces with strong local operators, bringing the center to nearly 100% occupancy in less than 2 years, and increasing the net operating income of the property by 33%. We also worked diligently to extend the leases of many of the larger credit tenants at the property, bringing the weighted average lease term of the asset to more than 7 years.
The property was sold on February 10 to an exchange buyer who recognized the value that we had created and appreciated the stability of the asset, as well as its potential for long term appreciation through a parcellation strategy which we were implementing. The new buyer will be retaining Milan Capital Management as the property manager.
On a project level, we achieved a 38% annual IRR, and due to the structure of the deal, our small group of high-net-worth investors doubled their money in less than two years.
We’d like to thank our preferred equity partner, Peaceable Street Capital, our lender, Prime Finance, all of our high-net-worth equity investors who trusted us with their hard-earned money, the team of Gary Stache and Bill Maher from CBRE, who represented the Buyer, and of course El Warner‘s team at Colliers who worked on this deal both at acquisition and at disposition— “from the cradle to the grave”, if you will.
Christopher Nichelson, President
Milan Capital Management, Incorporated
701 S. Parker Street, Suite 5200, Orange, CA 92868
714.687.0000, x. 101
chris@milancap.com www.milancap.com
DRE License: 01841081
Officer Identification Number: 01311951
Growing Cash Flow for Today, Building Value for Tomorrow
