The Next Perspective in Real Estate ®

Anatomy of a 20-Year Deal

The last issue of “The Next Perspective” highlighted the disposition of a Best Buy property in Deptford, New Jersey. Following is a story that looks more closely at that disposition and “The Anatomy of a 20-Year Deal.”

The purchase of a 60,000-square-foot Best Buy store in Deptford, NJ in 2001 was one of the first significant acquisitions for an affiliate of Next Realty.

Earlier this year, Next completed the sale of the asset following in-depth negotiations to extend Best Buy’s tenancy for an additional 10 years. The results achieved through the disposition of the asset were considerable with a net return multiple of 9.80x to investors.

Some ownership and management highlights over the last 20-plus years include:

  • With the consolidated ownership structure, Next refinanced the property making it possible to return the investors’ original capital in the early stages of the property’s ownership.


  • Next successfully negotiated a long-term lease extension with Best Buy. This allowed Next to avoid “option jail,” a short-term lease that provides a higher rental rate but significantly hamstrings ownership’s ability to sell an asset.


  • Over the course of the 20-plus-year hold, Next cultivated a close working relationship with Best Buy. This relationship, which occurred at a time when the climate for Big Box retail and Big Box retailers was changing dramatically, couldn’t change the prevailing uncertainty but certainly made it easier to work through solutions and opportunities.


Over the 20-plus years of ownership, Next executed a hybrid value-add/value-keep strategy. In the initial stages of ownership, Next added considerable value by creating the fee-simple ownership structure. With that value created, and with a long-term lease in place, Next’s ongoing management initiatives allowed it to keep that value, for the benefit of investors.

Results like those achieved with our Deptford investment are possible because Next patiently followed a long-term, strategic course of action, executing the business plan with flexibility and agility, especially when considering the various issues and complexities that were overcome throughout the property’s lifecycle.