Turning a Last-Minute Vacancy Into a Stronger Investment Story Through Collaboration, Buyer Targeting & Disciplined Execution
Sands Investment Group team, led by Ethan Offenbecher, Z Rizvon, and Baker Baine, successfully facilitated the sale of a newly developed neighborhood shopping center in Olive Branch, Mississippi, despite an unexpected leasing challenge that surfaced just as the property was preparing to go to market.
Originally developed by a longtime client focused on developing anchored power centers throughout the Southeast, the center featured strong national tenancy, newer construction, and an exceptional location within one of the Memphis MSA’s strongest retail corridors. However, unexpected lease termination from one of the tenants shortly before marketing created uncertainty that threatened both pricing and buyer confidence.
Working closely with the seller throughout the process, SIG helped navigate the lease-up strategy, identify the right buyer profile, and coordinate the Zcomplex moving pieces between the buyer, lender, equity partners, and leasing process. The result was a successful closing that benefited both parties while strengthening long-term relationships on both sides of the transaction.
Client Overview
The seller, a family office based in Texas, is a developer of shopping centers anchored by tenants such as Academy Sports and Hobby Lobby, with projects concentrated across the Southeast. The firm developed Olive Branch Crossing in 2017 alongside the adjacent power center, selecting the site for its position directly across from a Super Target, strong traffic counts along Goodman Road, high average household incomes, and rapid population growth.
SIG’s relationship with the client spans more than a decade, including the $10 million sale of Parkdale Village in Beaumont, Texas, in 2019. As a merchant developer, the client’s objective was clear: stabilize the asset and sell when market conditions supported their target returns.
The Challenge: Protecting Exit Value After a Key Tenant Fell Through
Olive Branch Crossing went to market as a stabilized asset, but the deal changed suddenly:
- A national food and beverage tenant whose occupancy required a costly drive-thru buildout fell through right as the property was listed, creating a vacancy that threatened the seller’s exit pricing guidance.
- A master lease was explored to bridge the gap, but the market rejected the structure as phantom income.
- Planet Fitness occupied 68.81% of the GLA, and with many investors cautious about gyms post-COVID, roughly two-thirds of interested parties disqualified the deal based on tenant concentration.
- The Seller was entertaining an LOI with FedEx to backfill the vacancy; however, the terms were still being negotiated, and the timing of execution was paramount to the Buyer.
- The buyer’s lender needed to grant preapproval based on an LOI because the lease had not yet been signed.
The transaction required backfilling the vacancy, rebuilding lender confidence, and keeping a shrinking buyer pool engaged, all at the same time.
The Strategy/Our Approach:
1. Coaching the Seller Through the FedEx Backfill
The SIG team worked closely with ownership as they re-engaged FedEx to fill the vacancy. Our team coached the seller on lease terms that would strengthen the center’s NOI and support the exit. The result was a brand-new 10-year lease with a strong national credit tenant, executed at the closing table between the buyer and the tenant. The new lease significantly enhanced the credit profile and added more term to the weighted average lease term (WALT). FedEx is headquartered in the Memphis MSA, giving investors confidence in the company’s long-term commitment to a location in its own backyard.
2. Targeted Outreach at Scale
For every listing, SIG identifies and directly targets prospective buyers who already own real estate in the broader MSA or state, with a 24-hour response goal on all inquiries. On this deal, the team made over 1,000 calls to buyers, generating approximately 300 unique inquiries and ultimately eight offers.
3. Leading with Transparency on Tenant Concentration
Rather than downplaying the property’s biggest hurdle (Planet Fitness accounting for nearly 69% of the GLA), the team addressed it upfront with every prospective buyer. This transparent approach ensured conversations focused only on investors whose acquisition criteria aligned with the opportunity. SIG then reframed the discussion around the property’s strengths, highlighting that the franchisee is the largest Planet Fitness operator in the system, with more than 190 locations, while Placer.ai data demonstrated the location’s strong operating performance. By combining transparency with market data and operator quality, the team transformed what many initially viewed as a weakness into a credible long-term investment story.
5. Structuring the Credits That Kept the Deal Alive
The FedEx lease came with landlord commitments that had to be translated into closing economics. SIG built a detailed financial model to calculate the white-box cost using construction bids from FedEx’s preferred contractors, added the tenant improvement allowance, and layered in rent and triple net credits to cover the roughly four months of payments FedEx needed to make the buyer whole. The model went through multiple rounds of negotiation, but it gave the buyer, the seller, and the lender a shared, transparent basis to close.
6. Selecting a Buyer Built for the Deal’s Complexity
With eight offers on the table, the highest number was not automatically the best one. This deal needed a buyer who could absorb a live lease negotiation, closing credits, and a financing process built around an unsigned lease. SIG vetted every offer on the strength of the buyer’s ability to close, not just terms, and selected a regional shopping center operator in the greater Tennessee area who knew the market, visited the site, and brought a patient, cooperative approach to the transaction.
Key Challenge: Turning a Vacancy Into a Competitive Advantage
The defining challenge was transforming a last-minute vacancy into an opportunity that enhanced, rather than diminished, the property’s value.
Rather than relying on a temporary master lease structure that buyers viewed skeptically, ownership, with our team’s help, secured a long-term FedEx lease that significantly improved the rent roll. By carefully coordinating lease timing, lender expectations, and closing economics, SIG helped convert what initially threatened the transaction into a strong selling point selling point.
The Results: Strategic Execution Drives a Successful Closing
RESULTS SNAPSHOT
- 38,330 SF Multi-Tenant Retail Center on 2.76 Acres
- 8 Offers Generated
- 300+ Qualified Buyer Inquiries
- Submarket Vacancy of 1.7% at Time of Sale (CoStar)
- Brand-New 10-Year FedEx Lease Signed the Month of Closing
Both parties won in this transaction. The seller got their price, and the buyer closed on a 100% occupied center in one of the hottest submarkets in the Memphis MSA.
In the seller’s words:
“Working with Ethan, Baker, and Z at Sands was a great experience from start to finish. They put together a comprehensive marketing process that generated strong interest in the property and ultimately resulted in eight competitive offers.
When we unexpectedly lost a tenant just before going under contract, they didn’t miss a beat. They helped with key deal points on a new 10-year lease with FedEx and kept the transaction moving despite what could have been a major setback.
Throughout the process, they were proactive and responsive. They provided valuable guidance on pricing, buyer negotiations, and navigating due diligence. Their communication was excellent, and they consistently anticipated issues before they became problems.
I would highly recommend the team to anyone looking for a knowledgeable, hardworking shopping center team that knows how to maximize value and get deals across the finish line.” – Seller
The Power of Relationships, Narrow and Deep
For the shopping center team, Olive Branch Crossing reinforced the philosophy of going narrow and deep with relationships, and meeting problems in a shopping center sale by addressing them head-on. The seller relationship spans over a decade and two closed transactions. The buyer, a first-time SIG client, developed such a strong relationship with the team during the process that the company returned to SIG to list one of its own properties for sale.
The asset itself tells the rest of the story. Olive Branch’s population grew by 23% from 2020 to 2024, with an average household income of $112,369 within a three-mile radius. The center sits on Goodman Road, the main retail corridor in Olive Branch, with roughly 30,000 vehicles per day and national co-tenancy within a block, including Target, TJ Maxx, Ross, Michaels, HomeGoods, Ulta, Hobby Lobby, and Academy Sports. For a stabilized, newer-construction asset with below-market rents in a submarket with a 1.7% vacancy rate, this was a classic wealth preservation acquisition with built-in NOI growth throughout the lease terms.
Do you own a multi-tenant retail center with a complex tenant story? Connect with our advisors to see how SIG’s positioning and transaction management can deliver certainty at the closing table.
IMPORTANT INFORMATION: Sands Investment Group and its affiliates do not practice law, and do not give legal, tax, or accounting advice. All clients are advised to consult their tax, legal, and accounting advisors before engaging in any transaction.
