LRG Real Estate Partners Aquire Lease Option for Fair-Anselm Shopping Plaza

LRG Capital Group’s lease-option acquisition last week of the 66,100-square-foot Fair-Anselm Plaza shopping center and offices in Fairfax is an example of the type of creative deal-making called for when both tenants and financing can be scarce, according to Roger Smith, an agent with Cornish & Carey Commercial who has been marketing the Fairfax property for the Friedman family for years.

“We’ve been on the market for a couple of years, but financing has been the challenge,” he said.

Lenders often look for the ability of property rent revenue to cover debt payments, and sellers often want to walk away after a sale. But the prospects of getting income while a potential buyer considers a purchase of the property can be advantageous when the property has a significant vacancy, according to Mr. Smith.

The center’s 22,000-square-foot anchor-tenant space, vacant since the Albertsons grocery store closed in 2006, complicated financing for some potential buyers.

To boot, some redevelopment plans some buyers put forward for the 40-year-old center, such as demolition for housing, sometimes were at odds with community ideas. Larkspur-based LRG’s long history with Marin County properties will be key in any revitalization of the property, Mr. Smith said.

The LRG investment fund that purchased the building controlled $30 million worth of mostly Marin office and multifamily properties at the end of last year and had positive net cash flow from them, according to documents posted on the firm’s website.

While popular in acquisition of distressed residential real estate, lease-options haven’t yet become prevalent in acquiring challenging commercial real estate, according to Mr. Smith.

Other creative options include seller financing, which Kimco Realty Corp. employed when marketing several shopping centers in the North Bay in the past year.