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Metro Store Portfolio: Case Study

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Impact Of Deploying A New Brand, Staff, Operating Standards, And Tenant Services On 15-Store Portfolio A 15-store portfolio was acquired by a Metro Storeage LLC JV 12/2010 for a total purchase price of $45.9 million, or $52rsf. The 870,000rsf portfolio is located in seven secondary MSA’s in two states, average age was five years, and the assets offered 100% single story drive-up non-climate controlled product. The acquisition cap rate on sellers trailing 12 NOI was approximately 7.5%. The portfolio included 11 stabilized and four unstabilized stores and had an overall physical occupancy of 84% at acquisition. The portfolio generated less than 1% of its total revenue from Other Income and it was almost exclusively from late fees as the portfolio did not have any ancillary revenue streams. The stores did not offer merchandise, tenant insurnace, and admin fees were not consistently applied. …show more content…

(The stores are located in Occupancy is 92%+, a 10% weighted increase since acquisiton Gross potential rent has increased 65%, or 13% annually, to $10.75rsf Effective (actual) rent is $8.30rsf vs. $6.14rsf at acquusition. An increase of 8% per year. Tenant insurance has a 90% penetration on new rentals; 78% of total tenant population is insured Merchandise sales average $275 (net of COGS) per month, per store. This is equal to $14.75 per new rental Net Operating Income will exceed $45,000,000 in 2016, having increased more than 8%, on average, annually since acqusition Other Income is more than 8% of total revenue and that, along with the overall financial imnprovement of the portfolio, is the result of implementing a “Best-In-Class” Operation, System Infastructrure, and Standards. This includes: New operating systems, technoogy and

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Metro’s profit margin is also about double the percentage of Loblaws which demonstrates that Metro is better at taking revenue and turning it into profit than Loblaws. This company’s net earnings had a large increase of 12.9% from the previous year. The profit margin is important for shareholders because it shows them that the company is efficient and profitable. In addition, food deflation should ease in the next quarters so this will help grocery retailers, like Metro, to increase their profits and

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