Volunteer Crossing Shopping Center

After: 
Before: 

1103 Volunteer Parkway, Bristol, TN

The Challenge

The former tenant of this Bristol, Tennessee property was a department store that had declared bankruptcy, leaving the premises vacant for an extended period and in need of substantial capital improvements and repair. The market vacancy was high, the local real estate market was flat and local property investors viewed the property unfavorably due to the property's long vacancy, and its close proximity to the State of Virginia, which carries a lower sales tax.

Opportunity Identified

Capstone’s interest in the property was based on three key factors: the low property basis at below replacement cost, the substantial unrealized value of the land, and the property’s location, which included direct frontage on two major traffic arteries.

Results for Capstone Investors: 33% IRR since 2001

Capstone acquired the property and met with real estate brokers, lenders and local contractors to devise a plan to make renovations, maximize the property’s cash flow, and increase its long-term economic value. To raise the capital needed to repair the main property, install a new roof and HVAC units, and make additional property improvements, Capstone quickly sold two prime outparcels. A former storage area in the back of the building was then converted to individual retail spaces with direct road frontage and parking, resulting in a 25% increase in the property’s leasable area. Capstone mobilized the local real estate brokerage community and utilized its database and contacts of national and regional retail tenants to market the property as a multi-tenant discount shopping center. After intensive marketing, Big Lots quickly signed on to become the anchor tenant. Subsequent national and local tenants were signed as the property was renovated. A third outparcel was sold.

As a result of the increasing operating income, Volunteer Crossing has been refinanced three times, returning capital to Capstone’s investors.