Grace Commercial Properties Portfolio
Grace Commercial Properties is a closely held private investment and development firm based in Johnson City, TN. In 2000 Grace purchased two multi-tenant office buildings (MIG Building and Summit III) and one shopping center (Harvest Towne). Subsequently RIS was engaged to provide management and leasing services.
Approach
Grace’s acquisition criteria for the investments had three components: stable income stream, highly visible location, and acquisition cost at or below replacement.
Customer satisfaction for existing tenants was the first priority along with attracting new tenants over time. Secondly, GCP would be looking for exit opportunities when the asset became fully valued.
Results
Harvest Towne Center went from 84% occupancy to 97% from 2001 to 2003 and was sold to a Florida investment group. In addition to double digit cash on cash returns during the holding period, Grace’s initial equity investment more than doubled.
MIG Building maintained a stable occupancy until 2005 when 11,000 square feet was leased to Capital Financial Group. The anchor tenant, Mortgage Investors Group extended the term of their 20,000 square foot lease. Subsequently the property was sold to a partnership that included Capital Financial Group and Art McWilliams. Grace Commercial Properties achieved double digit annualized cash on cash returns.
The Summit III continues to be managed by Realty Investment Services. A 21,000 square foot 7 year lease with IdleAire Technologies was recently completed. Grace continues to receive double digit cash on cash returns while using a moderate amount of leverage.