Food Court and Anchor Tenant Case Study – Bayamon PR (Rio Hondo Mall)

Project Description

In April of 1998 Management believed that Plaza Rio Hondo required additional food services within the mall. Shortly after the acquisition a long-time tenant, with considerable lease term remaining and occupying 20,000 sq ft at the center of the mall, began to experience financial difficulties. Management immediately entered into negotiations to purchase the lease, which we were able to do for $600,000. A 12-unit food court plus 2 outside facing retail bays were complete at a total cost of approximately $3,645,000. The first year net income generated from the food court was approximately $ 1,112,280. The total cost of the lease buy-out and food court construction was approximately $4,245,000 thereby equating to a yield on investment of 26.2%. Again applying a 10% cap rate to the net operating income stream, Management created additional net value of $6,877,800. Beyond that, the food court increased the business at the mall.