Lenoir Festival Shopping Center represents one of Vanguard’s more unusual purchase stories. This center, located in the town of Lenoir, in western North Carolina, was know to us through personal travel in the area. In 2015, the property had gone back to a lender as a result of a grocery store anchor vacating; the lender ordered the property to be sold at auction.
Vanguard was the successful bidder at auction, and signed contracts to purchase the property, subject to final seller approval as the auction reserve price had not been met. Several days later, we were informed that the seller was rescinding the contract, as they felt that the purchase price was too low, and they were going to try to add value to the property via a concerted leasing effort. We actually increased our offer, but that was rejected as well, and we moved on.
Approximately one year later, the seller’s representatives approached us and informed us that the property was to be put back into an upcoming auction, unless we wanted to purchase the property under our original contract terms. We quickly agreed, and moved forward with a seamless transaction.
With the purchase finalized, we moved on to the value creation mode. The overall property is 144,000 square feet, and at the time of purchase, was approximately 65% leased to two tenants, Tractor Supply and Belk.
Existing Tractor Supply
Lenoir Festival Shopping Center Renovations
After looking at several options to split the former grocery store box of 37k into two or more spaces, we presented the entire space to Bargain Hunt, a fast-growing closeout liquidator operating in the Southeast. They had recently entered the North Carolina market, and we were able to work out a deal with them for the entire space. There was a significant amount of interior and exterior work undertaken in order to get them in the space, and the improvement in the street appearance of the center is fairly dramatic, as shown in the accompanying photographs. Bargain Hunt opened their store in summer of 2017, and has proven to be a good draw and complementary anchor for the property.
Bargain Hunt Lenoir Festival Shopping Center
As a next step, we looked at suitable candidates for the next largest block of available space, 8,400 square feet. One of these candidates was Workout Anytime, a national franchise gym operator; we were aware that they had a franchisee who had opened several of these facilities in similar markets in North Carolina. Over time, we were able to secure a lease with this operator; their operation at Lenoir Festival is slated to open in mid-2018. This lease brings overall occupancy at Lenoir Festival to 98%, resulting in superior financial performance for the investors.
Vacant Shop Spaces
Future Home of Workout Anytime
As a final piece to our value-creation mode, we are looking at the possibility of creating an outparcel fronting busy US 321/Blowing Rock Boulevard.