Capital Rivers has an innate ability to uncover what could be considered a ‘needle in a haystack’ type development projects. Capital Rivers was set on identifying and developing new locations in Northern and Central California for Dollar Tree, Inc., a Fortune 500 company and the nation’s largest single-price-point retail chain in the country.
Dollar Tree was already well established in these market areas so identifying new target markets was not an easy task. Furthermore, due to the typically low rent, Dollar Tree is able to pay for a new store. It is difficult to find real estate that will yield a minimum return on cost.
It was necessary for Capital Rivers to get creative in order to solve the challenge and the solution was to go after “off-market” real estate. In this case it was an existing building that had potential to be retro-fitted. Capital Rivers identified an open and operating Hardware & Plumbing Store, which had been in business for over 40 years, that owned and occupied the building which was the right size for a Dollar Tree store.
- Capital Rivers utilized it’s in depth market knowledge and strategic mapping capabilities to identify the specific target site.
- Capital Rivers then contacted the owner of the business and real estate directly. After establishing a level of trust and transparency with the owner, Capital Rivers was able to ultimately secure an agreement to acquire the property as well as an adjacent building/lot for the parking lot.
- Capital Rivers secured a lease with Dollar Tree, acquired the property with a loan from US Bank, and leased it back to the business owner so they could liquidate their inventory. During the liquidation sale among the other things, Capital Rivers pursued its permits, demolished several structures on the adjacent lot, upgraded the buildings electrical from a single to three phase system, installed a loading dock, and created a new parking lot to serve the Dollar Tree store.
- Capital Rivers was able to deliver the building and site to Dollar Tree within approximately 60 days from the acquisition date and reduce the cost of the project.
Capital Rivers was successfully able to identify, acquire and retro-fit an existing building/ property for a new Dollar Tree store.
- Dollar Tree secured a new store in an untapped market and was able to open before their scheduled opening date.
- Capital Rivers was creative in its acquisition strategy, value engineered the project, and managed the subcontractors to bring the project in under budget.
- Capital Rivers was ultimately able to achieve an 11.1% Return on Cost; sold the project at a 5.95% Capitalization Rate achieving an 87% Unleveraged Return.
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