Case Studies

Since 2000, Next Realty has made over 60 investments on behalf of its affiliates and sponsored funds.  The investments exceed $500,000,000 in gross asset value, totaling nearly 2,000,000 square feet of retail space and over 3,500 parking spaces nationwide.

Our investor base is made up of both high net worth individuals and institutional joint-venture partners.

Currently, Next Realty is investing capital on behalf of Next Realty Fund VIII, LP and will shortly launch its next investment vehicle, Next Realty Fund IX, LP.

Next Realty focuses on the acquisition and management of retail properties and parking facilities throughout the United States.  The assets shown below are examples of prior Next Realty investments.

Institutional Parking Joint-Venture:
Philadelphia Parking Portfolio

Philadelphia, Pennsylvania

In November 2004, Next Realty together with an institutional joint-venture partner, acquired a parking portfolio consisting of two garages totaling 700 spaces in Center City Philadelphia.

Shortly thereafter, in April 2006, Next Realty was successful in selling one of the assets and returning all of the equity to the investors.

With the remaining asset, Next Realty re-negotiated a parking lease and repositioned the retail component by upgrading the tenant mix.

In May 2015, Next Realty secured what is believed to be an attractive offer and successfully completed the sale.  The sale resulted in a Net Internal Rate of Return of approximately 54% and a Net Return Multiple of approximately 3.2x to the investors during the 10.5 year hold period.  

Redevelopment Opportunity:
350 South Waukegan Road

Deerfield, Illinois

In September 2011, Next Realty acquired four nonperforming cross-collateralized loans secured by a restaurant building and other collateral.  Subsequently, Next Realty took title to the property and sold the other collateral, which helped reduce the basis.  

The original business plan involved converting the former restaurant into a multi-tenant retail building.  Ultimately, Next Realty was successful at identify a higher and better use for the property and entered into a long-term lease with Northwestern Memorial Hospital (“NWMH”). During the following 12 months, Next Realty obtained the necessary municipal approvals and redeveloped the property into a two-story medical office building.  NWMH opened for business in April 2013.

Upon completion, the property was listed for sale at what was believed to be an aggressive asking price, and received numerous offers.  The property was sold in July 2013, within 2% of the asking price. The sale resulted in a Net Internal Rate of Return of approximately 57% and a Net Return Multiple of approximately 2.2x to the investors during the 22 month hold period.  

Before:
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After:
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Parking Privatization:
Fountain Alley Parking Lot

San Jose, California

In October 2011, Next Realty Fund VII, LP (“NRF VII”) acquired a 54,000 square foot, 160-space parking lot in the historic district of downtown San Jose. The property was being auctioned-off by the San Jose Redevelopment Agency and presented what was believed to be a prime opportunity to privatize the operations.

Prior ownership was not maximizing the operation, charging significantly below market rates and subsidizing parking for many of the local businesses. Furthermore, there was significant slippage in revenue due to lack of automated controls.

After acquiring the property, NRF VII hired a new management company, installed state-of-the-art parking access and revenue control system (PARCS) and overhauled the operation. Cashiers were eliminated and new ticket dispensers, gates, exit verifiers and pay-on-foot machines were installed.  At the same time, rates were realigned and the average ticket price increased substantially.  As a result, the net operating income increased by more than 250 percent.

In December 2014, NRF VII sold the Fountain Alley Parking Lot to a local developer, generating what is believed to be an attractive return for the investors.  Because this investment was part of NRF VII, returns are only reported on a fund-level.  Fund VII continues to own and operate several remaining properties.

Asset Repositioning:
Oak Lawn Promenade

Oak Lawn, Illinois

Oak Lawn Promenade is a 32,000 square foot neighborhood shopping center located in a busy intersection across from the Chicago Ridge Mall.

In December 2013, Next Realty Fund VII, LP (“NRF VII”) acquired the property from a distressed owner.  The transaction was completed within 17 days of the date that NRF VII reached an agreement with the seller, and it was acquired all-cash.

Upon acquisition, NRF VII implemented an extensive capital improvement plan.  The façade was replaced in its entirety and extensive repairs were made to the roof, parking lot and sidewalks.  Furthermore, a new pylon sign was installed.  Due to the physical improvements to the center, and the active asset management as compared to the previous owner, NRF VII was able to reposition the property and upgrade the tenant mix.

The property was refinanced in July 2014, and NRF VII investors received a significant portion of their initial invested equity. The property is currently 100 percent leased and continues to generate what is believed to be an attractive cash flow stream.

Next Equity Program (NEP) Joint-Venture:
Evergreen Square Shopping Center

Peoria, Illinois

Evergreen Square is a 110,000 square-foot community shopping center featuring a diverse mix of national tenants including T.J. Maxx, Petco, Party City and Dollar Tree.  

In January 2014, Next Realty Fund VIII, LP (“NRF III”) and an operating partner acquired the property from a lender who had previously foreclosed on the property.  Despite the tertiary nature of the market, NRF VIII purchased the property at what is believed to be an attractive basis, and was successful at expanding several key tenants and securing long-term occupancy for the asset.

Given the strong demand for income producing assets and availability of attractive financing, in August 2015, Evergreen Square was sold to a private investor.  NRF VIII was able to achieve what is believed to be a profit on this property in a short period of time. Because this investment was part of NRF VIII, returns are only reported on a fund-level.   NRF VIII continues to own and operate a diversified portfolio of properties.

Institutional Retail Join-Venture:
Lincolnshire Commons

Lincolnshire, Illinois

Lincolnshire Commons is a 130,000 square foot destination shopping center with a strong mix of high-end restaurants, fashion-oriented shops and convenience-based retail.  The property was built in 2006 by General Growth Properties.  Major tenants at the property include The Cheesecake Factory, Fleming’s and Kona Grill.  

In September 2014, after a year of negotiations, Next Realty Fund VIII, LP (“NRF VIIV”) and an institutional joint-venture partner completed the acquisition of Lincolnshire Commons.  At that time, the anchor tenant building was occupied by Barnes & Noble at significantly below market rent.  The business plan for this asset involves re-tenanting the anchor building with a stronger national tenant at market terms.

To that end, NRF VIII successfully identified a suitable replacement tenant and negotiated a long-term lease with NorthShore University HealthSystem.  The building has been turned over to NorthShore and they have commenced their build-out.  The tenant is projected to begin occupancy by the end of 2016.

In order to maintain the high image of Lincolnshire Commons and continue to attract additional tenants to the shopping center, NRF VIII has been making capital improvements to the property including landscaping, lighting and parking lot repairs. Furthermore, NRF VIII is in the process of obtaining approvals from the Village of Lincolnshire for three new pylon signs.  This is expected to improve the visibility of the tenants from the road and contribute to the image and intrinsic value of the property on a long-term basis.

Asset Repositioning:
4600 Plaza

Harwood Heights, Illinois

4600 Plaza is a 32,000 square foot neighborhood shopping center in an infill location along a major retail corridor in Harwood Heights, Illinois.  The trade area surrounding 4600 Plaza has enjoyed historically high occupancy of approximately 99 percent.

In February 2015, Next Realty Fund VIII, LP (“NRF VIII”) completed the acquisition of 4600 Plaza from a local owner who primarily operates office properties.  4600 Plaza was the only retail property in the seller’s portfolio and its value was not being maximized.  The business plan for this asset involves upgrading the physical condition of the building, improving the tenant mix and raising rental rates over time.

In less than a year, NRF VIII relocated several tenants, renegotiated some of the leases, and finalized a lease with American Mattress for the entire end-cap space at a substantially higher rent than what was paid by the former tenants.  As a result, the net operating income increased by more than 100 percent.  4600 Plaza is currently 100 percent leased and continues to generate what is believed to be an attractive cash flow stream.

In order to be able to continue to improve the tenant mix and further increase rents, NRF VIII is commencing a façade renovation project. This project is expected to contribute to the intrinsic value of the property long-term.