Frontier Mall is an enclosed shopping mall in the North Battleford, Saskatchewan. Strathallen purchased Frontier Mall in late 2006 on behalf of its value add fund: Strathallen Retail Property Fund 1 (SRPF1). With a property vacancy of more than 10%, Strathallen recognized an opportunity to leverage off of its leasing expertise and increase property income.
Executing the Value Add Asset Plan
During the 2-year hold period, a lease was signed with the Regional Health Authority for 20,000 SF. Strathallen then negotiated with Shoppers Drug Mart an expansion into a new 18,000 SF prototype store. Other leasing initiatives also included replacing a number of struggling tenants with stronger national tenant operators.
During the hold period Strathallen increased Net Operating Income by 85%, occupancy was increased from 89% to 98% and CRU sales per square foot in the mall increased by over 20%. The investment provided Strathallen Retail Fund 1 investors with a realized IRR of approximately 48%
over a 2-year hold and a 1.7x equity multiple (pre-performance fees).