Adevelopment of Derby LLC acquired the 170,683-s.f. Derby Shopping Center in Derby, Conn., for $15.35M. The property is a net-leased retail asset anchored by Lowe’s with a weighted average lease term (WALT) of 13 years.
Property: Derby Shopping Center, Derby, Connecticut
Price: $15.35M
Seller: 500 NHA LLC
Buyer: Adevelopment of Derby LLC
The deal featured five freestanding buildings — four occupied by net-lease tenants and the fifth available for lease. While the asset offered stable cash flow and ease of management due to its absolute net leases, one challenge was marketing the property to national net-lease investors, who generally do not attribute value to vacant single-tenant buildings, while the seller sought to capture value for the entire asset.
“Lowe’s, which occupies 90% of the total square footage, contributes to the center’s overall weighted average lease term of 13 years, giving an owner a sense of security. Investor demand for this center was strong,” said Jim Koury, senior managing director of investments at IPA. Koury represented the seller and procured the buyer with Henry McKenney, associate director of investments at Marcus & Millichap and John Krueger, the firm’s broker of record in Connecticut.
“The buyer also felt they could lease the available single-tenant building to a net-lease tenant by leveraging their broad relationships with national and regional net-lease tenants,” Koury said.
In addition to Lowe’s, existing tenants include Splash Car Wash, Webster Bank and Dunkin’. The property is shadow-anchored by the area’s dominant grocer, Big Y.
The transaction is notable for allowing the buyer to acquire four freestanding net-lease assets in a single deal, while maintaining upside through lease-up of the vacant building. The property was also valued based on the weighted average pricing of its individual single-tenant components rather than a higher cap rate typically associated with multi-tenant shopping centers, providing a more favorable valuation structure.
