Purchased in 1986, the Hinesville Kmart Plaza is situated at the intersection of the two major highways in the City of Hinesville, GA, the home of Fort Stewart, a 280,000-acre Army base. It is the home of the 3rd Infantry Division and during the Iraq war, became known as the U.S. Army rapid deployment force base. The Kmart was expanded from 50,000 sq ft. to 84,500 sq. ft. in the 1990s. The center, at that point, became 129,839 sq. ft.
In 2002, after Kmart had become a stressed discounter and the company filed for Chapter 11 bankruptcy. Under the proceedings, they could opt out of a lease as a part of their reorganization. They closed the store and we were stuck with an empty, major anchor-tenant space.
There were no tenants with credit to take their place in a “neat” fit. Based on our past experiences, we first dealt with the lender who was, to say the least, nervous. They had confidence in us, and we made them realize that we needed time to secure replacement tenants and time to do the construction modifications to make it all work. The lender, based on our past performances, stayed with us and did not call the loan. We also had to talk to other credit tenants with co-occupancy clauses that said that they could either terminate their lease or reduce the rent and get them stabilized. The cash shortfall on rents was also a challenge. Time was not our friend.
We did an intense calling process to the fifty largest tenants with national credit who would consider taking smaller space. The 84,500 sq. ft. space was leased by Big Lots, Save-A-Lot grocers, It’s Fashion Metro (a Cato company) and Michael’s Deli. The Kmart rent was approximately $2.50 per sq. ft. all in. We were able to greatly increase our income threefold. The loss of K-mart opened up opportunities for two outparcels due to eliminating restrictions. We overcame major construction issues and worked with the City of Hinesville’s building department that had no interest in an empty center. It is clear that our experience and contacts made a difference. Our planning had us ready and we jumped on it. We earned the respect of our lender by showing them that even in the most dire situation, Tobin Real Estate delivers.