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Shark Tank Capital Connections May 9, 2012

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David selberg, Shark Tank

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Page 1: Shark Tank

Shark Tank

Capital Connections May 9, 2012

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Shark Tank

Capital Connections May 9, 2012

Executive Summary

Property Type:   Premium Outlet Center

GLA:  280,000 SF

Location: Southaven, MS Metro Memphis, TN

Sponsorship: Poag Lifestyle Centers & Simkin Group

Key Considerations: 

• Outlet Centers are currently the favored retail development

• Cap rates are currently 50bps premium to other retail

• Underserved Market/Minimal competition• High demand from tenants• Traffic Count – 57,000 daily on I‐55• Regional Draw

• Memphis Metro Population – 1.3 million• 2.0 million within 75 miles radius 

Summary Financials

Sources of FundsAmount Per SF

Debt Financing $36,900,000 $131.79Investor $14,220,000 $50.79

Sponsor $1,580,000 $5.64Total Sources $52,700,000 $188.21

Uses of FundsLand Acquisition $8,300,000  $29.64Construction Costs $32,000,000 $114.29Soft/Finance Costs $12,400,000 $44.29Total Uses $52,700,000 $188.21

Stabilized NOI $   5,700,000

Stabilized Value (7 cap) $81,400,000

Stabilized Return on Cost: 10.7%

Stabilized Debt Yield 15.5%

Equity Venture IRR 20.0%+

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SPONSOR OVERVIEWPoag Lifestyle Centers LLCHeadquartered in Memphis, TN, Poag Lifestyle Centers has been committed to developing, leasing, and managing some of the country’s finest Lifestyle Centers.

Shark Tank

Capital Connections May 9, 2012

Poag and its founders have developed 13 Lifestyle Centers representing over 4,000,000 square foot of space. Today Poag manages 6 Lifestyle Centers encompassing over 3,000,000 square feet.

Poag’s success with the lifestyle tenants translates well to outlet centers since some of the tenants found in outlet centers are the same as in Lifestyle Centers, and Poag has teamed up with The Simkin Group because of their long term relationships with the more traditional outlet tenants. In addition, the style of outlet design and construction is moving more toward the style of Lifestyle Centers.

Simkin Group• 27 Years experience with developing, leasing, and

managing outlet centers.• Ron Simkin spent most of his career with Belz

Enterprises, which is considered the founder of the Outlet Factory Centers, where he was the Director of the Factory Outlet Division.

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Shark Tank

Capital Connections May 9, 2012

The Opportunity• Unleveraged operating return of 

almost 11%• Equity IRR of more than 20%• Capitalize on trend toward outlet 

retail• Successful opening in 

Oklahoma City (Sales of almost $400 psf)

• Favorable Cap Rates • Sponsor Strength

• Poag brings years of success in retail development 

• Simkin Group brings years of success in outlet development

• Strong Growth Area• Minimal Competition

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Shark Tank

Capital Connections May 9, 2012

Project Overview

• New Outlet Developmento 280,000 square foot 

developmento 43 Acreso 6 pads

• Strong Public/Private partnership• Good Location

o I‐55 and Church Roado 57,000 cars daily on I‐55o 20,000 cars daily on 

Church Roado No Outlet Competition

• Strong Demographics• 2 million people within 75 

miles• Southaven has doubled in 

size since 2000• Strong Tenant interest

• 80,000 SF in LOI’s under negotiation

• 60% leased prior to construction start

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Shark Tank

Capital Connections May 9, 2012

Location & Market Overview

• Ideally located on I‐55 in Southaven, MS• 4.5 miles from Memphis, TN• Memphis Metro areas only outlet center• Adjacent to Olive Branch, MS which was the fastest growing city in the country in 2011.• Strong Public/Private partnership with City of Southaven and State of Mississippi•Located in strong retail hub.  Wal‐Mart, Home Depot, and Lowes have all opened up 2nd stores with no meaningful reduction in sales at the original store

*Source: CBRE Indianapolis 2011 Market Update

5 Mile 10 Mile 75 Mile

Population 79,333 264,283 1,950,000

Households 30,494 98,225 745,500

Avg. Income 61,500 56,000 55,300

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Shark Tank

Capital Connections May 9, 2012

Metro Memphis versus Oklahoma City

*Source: CBRE Indianapolis 2011 Market Update

Metro Memphis

Oklahoma City

35 Mile Ring

Population 1,237,000 1,175,000

Households 472,800 471,100

Avg. Income 60,900 58,600

75 Mile Ring

Population 1,950,000 1,740,000

Households 745,500 688,500

Avg. Income 55,300 55,300

**OKC sales are almost $400 psf.  At that level, Southaven will generate sales of over $110,000,000**

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Shark Tank

Capital Connections May 9, 2012

Tenant Profile

• Inline space • Better brands from the 

traditional retail concepts• Brands you would typically 

find in department stores• Anchors

• National Fashion Department Stores

• National Sporting Goods• Unique Restaurants 

• 80,000 sf of LOIs currently under negotiation

• Targeting executed leases for 60% of the space prior to construction start

• Memphis is a major distribution hub which is opening the door to unique tenants that do not typically have outlet stores.

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Shark Tank

Capital Connections May 9, 2012

COMPETITIONShopping Centers/Malls• Southaven Towne Center is 1.8 

miles away and contains a Dillard's, Gordmans, JC Penney, Ashley Furniture and Books‐A‐Million. Sales of $355 psf

• Closest Memphis Mall is 24 miles away

• Dominant Memphis Mall is 33 miles away

Outlet Centers• Casino Factory Outlets is 22 miles 

away in Tunica, MS• Poor location• Undersized• Lack of key tenants

• Next closest outlet mall is 238 miles away in Birmingham, AL

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Shark Tank

May 9, 2012

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May 9, 2012