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Investor Information for GONY, Ltd. and RCP Cross Creek, Ltd., Cross Creek Center, Arlington, Texas |
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Below are updates on the project provided by the developer. The updates are in sequential order with the most recent being first. Should these updates not answer a particular question or adequately address a certain concern, please email Steve Isbell for additional information.
Cross Creek Investor Update
September 26, 2008
Cross Creek is currently 62% leased. The vacant spaces include a salon, a restaurant and a shell space. The salon was forced to go out of business when it’s chief stylist moved to Houston. There have been numerous calls regarding the vacancies and a lease is out for review on the restaurant space. Although activity is encouraging, the vast majority of them are start-up businesses and quickly lose interest when confronted with the real costs of starting a business.
The partnership has agreed to lease the mineral rights on its 2.7 acres for 26.5% of the royalties and a signing bonus of approximately $26,500 per acre. The proceeds will be used to establish an operating reserve and to pay property taxes once they come due in January. The title work is nearing completion and the lease should be signed within 30 days.
A new marketing sign has been installed on the vacant lot in an attempt to attract a build-to-suit office or medical office use.
The proforma assumed a sale of the assets in January 2008. Slow leasing and a very tight credit market hindered the attainment of that goal.
Since the property is basically at breakeven and all of the spaces have been substantially, if not completely, improved, the partnership can use incentives such as discounted rent during the beginning of the term to entice potential tenants. Having spaces that are substantially completed lowers the cost for the end user and can work as a comparative advantage for Cross Creek when being compared to other similar centers.
Interior of the salon space
Interior of the physical therapist's space
Interior of the wireless store
Cross Creek Investor Update
April 17, 2008
Cross Creek Center is now 76% leased. A 4,775 square foot lease was signed with a physical therapy clinic (previously thought to be a medical billing office) and a 1,264 square foot lease was signed with a T-Mobile franchisee. MilkyWay Coffee vacated without notice on March 1st, however the partnership is aggressively pursuing a local fried chicken chain as well as Little Caesars for the space. The remaining vacancy is Suite 170 which is mentioned in the previous update.
These leases bring Cross Creek's income up over the breakeven point, but the short term loan mentioned in the previous update will be necessary and will likely absorb some of the excess cash flow. The developer hopes to begin quarterly distributions once the income stabilizes near the end of the 3rd quarter this year.
The project is still being marketed for sale. Additionally, once another lease is signed for either of the remaining vacancies, the Cross Creek's occupancy will be high enough to pursue refinancing the building which would allow a large portion if not all of the equity to be returned to the investors. That said, it's important to consider that the recent upheaval in the debt markets may make it more difficult to obtain adequate financing.
Cross Creek Investor Update
January 28, 2008
Cross Creek Center is currently 53% occupied. Suite 140 is bGn Spa and Salon which occupies 2,395 sf. Suite 150 is Tarrant County WIC which occupies 4,929 sf and Suite 190 is MilkyWay Coffee which occupies 2,018 sf. Suite 170 is vacant but has been “white boxed,” excluding lights.
A lease is out for review on 1,300 sf for a Little Caesars. However, no feedback has been received in more than a month’s time. A letter of intent has been negotiated on approximately 4,700 sf for a medical billing office. The potential tenant is currently pricing the cost of the interior improvements. Finally, T-Mobile has approved the site for 1,200 sf. The developer does not yet know the preference of T-Mobile in regards to timing and lease structure and therefore cannot offer any additional information at this time.
A key component of the current cash flow is the monthly reimbursement of $7,000 from Tarrant County for tenant improvement costs that exceeded the allowance. This will be paid for the next nine months. Once a lease is signed with a new tenant, it’s likely that a short-term loan will be required to fund the improvement allowance for that tenant. If this is the case, the developer will send a written request to RCP for approval to obtain the loan.
There has been no significant activity on the remaining pad site. A larger, more visible marketing sign is being considered to hopefully increase visibility.
Thank you for your support of Cross Creek Center.
Cross Creek Investor Update
October 5, 2007
The lease for the municipal use was executed by the county judge on October 2nd. Finishout on the 4,929 square foot space has begun and occupancy is expected by December 1, 2007. The lease execution was delayed for about 45 days due to an unrelated delay with the overall state budget. This lease brings the occupancy to 53%. For the next twelve months, the property has an approximate debt coverage ratio of 1.2 : 1 because of a reimbursement of improvement expenses associated with the municipal use. Although the property will have a positive cash flow, the excess cash will be utilized to establish adequate reserves for additional improvements on the remaining vacant space.
The picture below shows the approximate location of the building's three tenants. Please note that both of the remaining vacancies are in the building's most highly visible spaces. A letter of intent has been sent to a dry cleaners for an approximately 3,000 square foot portion the western endcap.
Additionally, construction has been completed on the O'Reilly Auto Parts store and it is now open for business. This, along with the Dollar General, has greatly increased retail traffic.
Cross Creek Investor Update
June 8, 2007
The partnership's construction loan was originally scheduled to go into the amortization period as of May 31, 2007. That would have meant two things, the first being that the partnership would be required to make a small principal payment in addition to the interest expense every month. That would work to lower the loan balance, the same as it does with the typical residential mortgage. The detrimental aspect of going into the amortization period would have been the required funding of the entire loan amount. Basically, the partnership would have drawn down the loan, escrowed the funds, and incurred interest expense on money that it hadn't yet actually used. However, the bank has extended the timeframe of the loan thereby giving the partnership an additional six months to utilize the funds.
Negotiations are nearly complete with the 5,000 square foot municipal use mentioned in a previous update. The current target date for occupancy is October 1, 2007. This lease will bring the center's occupancy to about 53%. Additional interest has recently been received from a medical use, insurance use and an interior design store.
The property has been listed for sale with Cheri White of Commercial Brokerage Corporation for $3,495,000. Here's a link to the offering package.
The property listing can be seen at www.loopnet.com, Property ID# 15140414
Construction is progressing on O'Reilly, please see photos below.
Here are additional recent photos of Cross Creek Center
Cross Creek Investor Update
March 30, 2007
Finishout is steadily progressing on the two tenant spaces. Occupancy for both tenants should occur within the next 45 days.
The partnership has made a change in its choice of leasing broker. Henry S. Miller Commercial has been selected to replace UCR Urban. Jayson Williams with Henry S. Miller Commercial is based in Arlington and has a good level of experience in dealing with local small businesses. UCR Urban had more of a national focus and over time it has become evident that the rental market in this location is favored by the small, local businesses.
The partnership has had interest from national tenants, namely Dollar General and O'Reilly Auto Parts. But both of those transactions were land purchases.
Cross Creek Investor Update
March 2, 2007
Finishout has begun on both of the tenant spaces. Photos appear at the end of this update. Both leases commence within the next 30 days.
Interest from potential tenants has remained steady. Over the past 30 days, inquiries have been received from two separate barber shops, a personal trainer and a cell phone accessory store. The large office user is focusing on another market at this time (north Tarrant county) but is still planning an office in the area of Cross Creek Center. So, although there is nothing imminent, the activity is promising. In order to increase the chances of these prospects becoming legitimate leases, the leasing broker has been informed that the landlord is willing to grant concessions to good credit tenants.
The medical clinic mentioned below is no longer a prospect as the tenant requested changes in the business terms of the lease that, considering the tenant was not able to obtain bank financing, were completely unacceptable to the landlord.
O'Reilly has not yet broken ground. But they are continuing to move forward, albeit very slowly.
Here are two photos showing the progress of the spa's finishout.
Here are two photos showing the progress of the coffee shop's finishout
Cross Creek Investor Update
January 29, 2007
The landscape issues below have been rectified and the property has been inspected by the city for the final release. One small issue remains, but it should be completed by the end of the week.
bGn Nails has received its building permit and expects to begin finishout work next week. MilkyWay Coffee has submitted its plans to the city and should also receive its building permit any time. The medical use mentioned in the previous update was not able to receive bank financing for his business plan. However, he has informed the partnership that he will move forward with a combination of investors and his own money. The executed lease or the required deposits have not yet been received and therefore the space is still being marketed.
Marketing activity continues to increase. A proposal has been sent to a barber shop. Additionally, a cable company payment center, a day-care operator, and another pizza place besides the one mentioned in previous updates have all requested information on the center.
The most promising lead of the past month is a 5,000 square foot office use. The site meets all of their qualifications and a decision is expected to be made "by the end of January." The use would be a service provided by a local government.
Finally, the general partner has been contacted by two separate parties regarding the sale of the property. An offer was received from one of the parties but it was substantially less than the value of the property. As of this update, another offer has not been received.
Cross Creek Investor Update
December 21, 2006
The contractor on Cross Creek has completed all phases of construction. After a couple of landscape issues are corrected, the contractor will apply for the final release from the city. Once the release is granted, utility meters will be installed.
A deal has been finalized with the medical user mentioned below and a lease has gone out for review. This brings the total occupancy to about 35%. Two contiguous spaces of about 5,500 square feet each remain, including the most valuable space on the western side of the center. Click here for a current floor plan. Please note that the medical use will actually be located adjacent to the coffee shop and not adjacent to the spa as shown.
Recently, a level of interest has been received from a local restaurant and an accountant. There still is no word on a decision from the carry-out pizza place.
Below are photos taken December 17, 2006.
Cross Creek Investor Update
November 8, 2006
Construction on Cross Creek is nearly complete. The storefront frames and glass should be installed by the end of next week. The interior firewall is nearly complete and the parking lot light bases have been poured.
The partnership still has not received word of an approval of this location from the franchise director for the carry-out pizza place. Regarding the barber shop, the gentleman was unfortunately called back to active military duty and will not be able to pursue his business plan at this time. A space plan has been submitted to an approximately 1,600 sf medical use for review. Upon the potential tenant's approval of the plan, an interior finish-out price will be determined and a lease will be negotiated.
Cross Creek was recently featured in a Star-Telegram article regarding retail development in the South Arlington area. Please click here.
Below are several pictures taken November 8, 2006.
Cross Creek Investor Update
September 10, 2006
Below are photos taken 9/6/06. The framing and the roof have been completed. The faux stone specified by the architect was not readily available so a similar alternate was chosen and has been ordered.
In addition to the back and forth communication between the leasing broker and the previously mentioned interested parties, a letter of intent has been sent to a barber shop. Beyond that, the carry-out pizza user has submitted the site to its respective franchise in order to obtain the necessary approvals.
Cross Creek Investor Update
August 4, 2006
Below are photos taken 8/4/06. Please note that the roof deck is nearly complete. Framing materials are due to be on site this coming Tuesday. After the framing is complete, within about two weeks, the stucco work will begin and the roof will be completed.
Due in part to the construction progress, a few prospects that had previously been interested are again reviewing the property. These uses include a carry-out pizza place and a franchise hair salon. Finally, the developer has begun a marketing push to hopefully attract some interest in the remaining pad site.
Cross Creek Investor Update
June 29, 2006
Here are photos from 6/29/06. These photos show the erection of the structural steel and roof joists. The roof deck has been delivered and should be installed within the next couple of days.
Cross Creek Investor Update
June 21, 2006
On June 20, 2006, the partnership closed on the sale of the remaining pad site on New York Avenue to Hi-Lo Auto Supply for the construction of an O'Reilly Auto Parts store. The partnership distributed a portion of the proceeds on June 21, 2006.
Additionally, a 2,000 square foot lease was received from a combination coffee and donut shop. The recent increase in construction activity has yielded an increase in sign calls. Vertical construction has begun and steel is expected to be on site next week.
In the previous update it was mentioned that the steel contractor had gone out of business and the general contractor was having to re-bid the job in order to get a price similar to what he had originally contracted for. Being unable to find a steel contractor that could do the job for the required price, the general contractor contracted directly with the fabricator and the erector, thereby saving the partnership a significant amount of money.
Finally, it appears a driver on Green Oaks lost control of his vehicle and ran over the "For Sale" sign for the remaining pad site. A new sign has been ordered and should hopefully be installed next week. The leasing broker has since stepped up efforts in marketing to driving schools and body shops.
Below are three photos taken on June 21, 2006 showing the construction of the rear CMU wall.
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Cross Creek Investor Update April 14, 2006 On April 5, 2006, the Substitute Landscape Plan submitted by O'Reilly Auto Parts was denied by the Planning and Zoning Commission. After being given the opportunity to review the plan, the developer determined that O'Reilly had misunderstood the intent of the ordinance and convinced O'Reilly that it should revise the plan and resubmit rather than terminate the contract. The developer has since shown the revisions to several staff members and a commission member and all feel that the issues have been adequately addressed. The revised plan will be resubmitted April 25 and will go before the P&Z Commission on June 7, 2006. Once the Substitute Landscape Plan is approved, O'Reilly will close on the purchase of the property. As previously stated, a portion of the sales proceeds will be utilized to pay down the existing debt and to establish a cash reserve, then the remaining amount will be distributed to the partners. The partnership will then have one pad site remaining, which is currently priced at $375,000. As for leasing activity, letters of intent have been submitted to a restaurant, a coffee shop and a hair salon. Additionally, the leasing broker has recently received inquiries from a dentist that is interested in the location. The general contractor has informed the partnership that the steel sub-contractor that was originally awarded the job has gone out of business after 25 years. The job is being re-bid to several steel contractors in an effort to obtain a price close to the original bid. Concrete block is on site and vertical construction will resume once a new steel sub-contractor has been selected. |
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Cross Creek Investor Update February 16, 2006 Construction has been completed on the slab, fire lanes, parking areas and sidewalks. However, an inspection by the civil engineer uncovered some problems with the elevation that, if left unabated, would have caused a significant amount of water to pool between the shopping center site and the neighboring CVS drug store. The contractor has since completed the correction by demolishing and re-pouring a portion of the fire lane at the proper specified grade. The structural steel has been ordered and the cement block should be onsite within two to three weeks. Preleasing still stands at about 14%. The leasing broker has continued to focus its efforts on the local market rather than the larger, national users. The revised marketing efforts have yielded a significant level of interest from a Mexican restaurant and a locally-owned dry cleaner. A sales contract was signed in September for the pad site north of Dollar General. The contract is with Hi-Lo Auto Supply, LP, which operates the well known O'Reilly Auto Parts stores. Closing is anticipated the second week of March, after the necessary municipal approvals. (Note added March 1, 2006: One of the necessary approvals was denied this week. Therefore, O'Reilly needs to revise its site plan, which will require an extension of the closing date for approximately 30 days, depending on the time needed for the revisions and the city's meeting schedule.) Proceeds from the sale will be used to pay down part of the loan, create a cash reserve and provide a distribution to the investors. The photo below shows the future dumpster enclosure, the rear fire lane and the slab.
The photo below shows the main drive lane along Green Oaks and the new parking spaces.
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Cross Creek Investor Update September 15, 2005 Construction officially began on Cross Creek Center in July. The necessary off-site storm sewer extensions have been completed. The main sanitary sewer system has been installed and the slab has been poured. The contractor is now preparing the parking lot. Due to an unexpected amount of water seeping into the piers while drilling, the foundation was redesigned to utilize a bell pier system. This allowed the contractor to not drill the piers as deep and thereby requiring less concrete. This resulted in a small savings from the budgeted foundation price. One lease has been signed with bGn Nails for approximately 2,400 square feet. A letter of intent is also being negotiated for a hair salon. A letter of intent has also been signed with an individual restaurant user but the prospect has been unresponsive as of late. Additionally, a sales contract is being negotiated for the pad site north of Dollar General on New York Avenue. The contract has a 120 day feasibility period and a 10 day close. The buyer is an owner/occupant retail use. Finally, the general partner was able to successfully lower the appraisal district's 2005 valuation of GONY's property. This lowered the partnership's property tax bill from approximately $30,000 to approximately $13,000. |
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Cross Creek Investor Update May 2, 2005
Rendering of Cross Creek Center The final plat was approved by the City of Arlington on Wednesday, April 20. This subdivided the land on Green Oaks, thereby legally creating the shopping center site and the adjacent pad site. The first set of construction comments have been addressed and a resubmittal of the necessary documents will be made the week of May 2nd. Depending on the city's willingness to reconsider some of it's comments, the shopping center should be under construction within the next 30 days. Leasing activity is increasing thanks to a more aggressive marketing approach as commencement of construction nears. Three letters of intent have been signed totaling approximately 6,500 square feet. The uses include a nail salon, a payday advance loan company and a restaurant. Significant interest has been received from a couple of donut shops, an existing salon desiring to open a second location, and a satellite dry cleaner. The drive-up windows on both sides of the center make Cross Creek highly desirable for a large number of uses. Dollar General has completed construction and opened for business on April 29, 2005. Below are pictures of the building.
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