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Monroe Retail Center back to Lender August 23, 2010

Posted by Sean Tufts in Retail Sales Comps.
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The Kelsey Road Station located in Monroe, WA has gone back to the lender in what is a prime example of the bubble bursting.  Originally built in 2007, the center attracted an array of mostly local tenants with rental rates at the peak of the cycle.  The property was marketed while construction was wrapping up and sold in June of 2007 for $9,326,000 ($432/sf).  The CAP rate at the time was sub 6.5% based on rent guarantees and holdbacks for the portion of the center that remained vacant.

The center is currently 58% occupied with an average rent of nearly $29/sf NNN and went back to the lender at a recorded value of $4,377,000 or 46% of the last purchase price.  By our estimate, this price represents an actual 6.85% CAP rate on the current occupancy and a value of $204/sf.  We do not expect the bank to hold onto this deal and will likely market the property for sale in the near future.

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