The Opportunity

Sage is pleased to present an opportunity to invest alongside Jay Williams and Property Commerce in Pearland Parkway Village, a 65,500 sf, multi-tenant retail shopping center shadow anchored by a top performing Target with exposure to over 80,000cars per day. Tenants include Burlington Coat Factory (national), Dollar Tree (national), AT&T (national), and Castle Dental (national).

Key Highlights

Great Location: Strategically located in an established retail corridor with immediate highway access and visibility to Beltway 8 and Pearland Parkway which experiences more than 80,000 cars per day.

Critical Retail Corridor: Retail in the area includes Target, Starbucks, Whataburger, Chick Fil A, Spec’s, and Studio Movie Grill making it a primary retail node serving a growing affluent surrounding population

Desirable Demographics: Diverse surrounding demographics with a population of over 90,000 residents and $83,000 average household incomes within 3 miles of the property.

Strong Shadow Anchor: The center is shadow anchored by a strong performing Target store.

Pad Building: The property includes a three tenant pad building with frontage along Beltway 8. Pad buildings such as this are currently trading in the 6% cap rate range offering a cap rate arbitrage potential.

Project Summary

Year Built: 2018-2020

Land Area: 6.0 acres

Acquisition Price: $10,250,000

Net Rentable Area: 62,585 sf

Occupancy: 94.8%

Year 1 NOI: $815,765

Business Plan

Sage Equity Partners anticipates maintaining the asset for a traditional hold period of 5-7 years.  With strong national tenants, long-term below-market leases, and accretive financing Pearland Parkway offers a dependable cash flow play with upside via lease-up.  

Upside: While modeling a 5% general vacancy factor is prudent for forecasting purposes it’s possible that the center will stay fully leased once stabilized. As an example, more than half the retail centers in the Houston MSA between 50,000 and 75,000 do not currently have vacancy.  Therefore as an upside scenario we removed the assumption that the center remains 95% leased.

Strong Upside: The strong upside scenario assumes that shadow anchored shopping center spaces remains highly sought after by a large pool of buyers. If that’s the case and coupled with long-term lease extensions the exit cap rate could compress into the high 7% cap rate range which would also deliver solid exit proceeds. 

Cap Rate Arbitrage: An alternative upside scenario exists that has not been included in the underwriting. Ownership could sell off the three tenant pad building at a +/- 6% cap rate once fully leased. With a return of proceeds, Sage LP’s would then hold the inline shop space (Burlington, Dollar Tree, Castle, Pizza Hut, Nail Salon) for north of a 10% cap rate which would yield a 15% cash on cash return.

Property Commerce will place new bank financing with five years of term, 65% leverage, an approximately 4.50% interest rate, with FCCU – a local credit union.

The Asset

Market Demographics


Offering size


Timing of Funds:

June 13th, 2022

Timing of Close:

July 7th, 2022

Management Team