Virtual Deal Simulator
The Co-Tenancy Clause: A Grocery-Anchored Retail Acquisition
Eight years left on the anchor's lease, and every in-line tenant's rent is quietly tied to it — size the loan like you know that.
You’ll Practice
- Identify and diligence co-tenancy clause risk in grocery-anchored retail leases before it becomes a lender objection
- Read a sponsor's refinance history as a credit signal to be understood, not a red flag to avoid asking about
- Calculate DSCR on a fully amortizing acquisition loan from the rate, term, and in-place NOI
- Assemble a lender submission package that separates underwriting-grade documentation from marketing materials
- Compare life company, bank, and CMBS execution for grocery-anchored retail and match structure to sponsor goals
- Negotiate a lender reserve requirement by restructuring the ask instead of defaulting to a worse loan
The Lead: Reidville Crossing
Your phone buzzes as you're walking out of Tuesday's pipeline meeting. It's Renée Castellano, Managing Principal of Castellano Capital Partners — a private investor you've placed two loans for before, both times moving fast and expecting the same from you. She's under contract on Reidville Crossing, a neighborhood shopping center anchored by Ingles Markets, a well-known regional grocery chain across the Southeast. The seller's attorney is already drafting the PSA. She wants a discovery call today, and she wants to talk about the loan before she talks about anything else. Before you call her back, you pull what you already know from the OM.
- Property
- Reidville Crossing Shopping Center, Spartanburg, SC
- Purchase Price
- $11,500,000
- In-Place NOI
- $1,100,000/year
- Implied Cap Rate
- 9.6%
- Anchor Tenant
- Ingles Markets — 8 years remaining on lease term
- In-Line Tenant Mix
- 11 tenants (~20,500 SF): Great Clips, T-Mobile, State Farm, Pham Nails, Domino's, Cary Cleaners, UPS Store, Jersey Mike's, and others — mix of local and national service tenants
- Requested Loan
- $9,500,000 acquisition loan, 6.9% fixed, 25-year amortization
- Sponsor
- Renée Castellano / Castellano Capital Partners — repeat client, two prior acquisitions in your pipeline