Vadnais Square

959 Co Rd E East, Vadnais Heights, MN 55127
Strategy: Current Yield
Status: Current
Purchase Price: $2,950,000
Acquisition Date: 8/31/2011
SqFt: 12,627
Off-Market, Repeat Broker

Vadnais Square is a retail center in Vadnais Heights, Minnesota. It is the only small-shop building in the area, near Target, Festival Foods and one of the largest Wal-Mart’s in the state.

Having been recently outbid on several similar shopping centers, we had a keen perspective on improving the market. We negotiated the off-market price down from the original ask and put the property under contract. The sellers sought to execute a 1031 tax-deferred exchange with their sale proceeds and wanted a trustworthy counterpart that could close.

After acquiring the property, we worked with the city to get a drive-thru approved for the building, which was Panera Bread’s second drive-thru in the state of Minnesota. Panera paid for the drive-thru and executed a long-term lease extension.

From 2011 to 2014, we created 13.85% rent growth and saw property value increase by over 30%. We also renewed, downsized, and inserted new tenants at the property to grow income and value. By 2018, the property had appraised for $4.3M (46% appreciation). When we refinanced our loan, a broker advised us it could sell for as much as $5M (70% appreciation).