Borders HQ landlord Agree Realty also selling Columbus, Ohio, store
Agree Realty wouldn't comment for my column that ran Tuesday, outlining the new listing of the Borders Inc. corporate headquarters at 100 Phoenix Dr. in Ann Arbor.
The listing - including the purchase price of $18.349 million for the 460,000 square foot facility that only holds about 600 employees right now - offers some insight into the dynamics behind the struggles of the bookseller.
It also shows that Agree, which depends on Borders for 27 percent of its $34 million in annual rental income, is diversifying.
Thanks to a reader, I received an email this morning that shows an Agree listing of another Borders property: The standalone store at 4545 Kenny Road in Columbus, Ohio.
This 21,000-square-foot store, leased into 2015, is priced at $3.525 million, or about $168 per square foot.
The capitalization rate - or rate of return for the investment, based on the net operating income and purchase price - is 11 percent for an investor at that price.
Cap rates are one marker of risk for an investor. For a building like this - called a "net leased building" because it's a standalone property leased to a single tenant - ranges in the Columbus market today appear to hover just under 10 percent. By comparison, a tenant like a stable bank might generate a cap rate between 5-6 percent.
Since Borders has announced plans to close stores, it'll be up to an investor whether that price is worth the risk.
Borders stock was selling at $1.44 per share this morning, giving it a market value of $103 million based on outstanding shares. It operates about 500 superstores in the US.
Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.
Comments
Rhe Buttle
Thu, Oct 7, 2010 : 8:01 a.m.
@javajolt1: Blockbuster is failing because they failed to keep up with the technology. Movie rental was the right market with VHS but with Internet movie downloads it is hardly worth the hassle of getting and returning a disk. You are right about Borders though - weren't they supposed to be a bookseller? So the coffee, movies, cds(music), and miscellaneous crap in their stores went kinda far left field. Aaah, I remember when you went to the tiny little Doubleday Book stores to see what has been recently published. Big box stores of all kinds will soon be on their way out, once America figures out that the small-town and city neighborhood shopping areas is the more economical and environmentally friendly way of life. Ann Arbor was once like that...
jaxie
Wed, Oct 6, 2010 : 8:14 p.m.
It's refreshing to see a corporation that isn'd "too big to fail." Isn't this is the way our system is supposed to work? Rather than publiclly financed bailouts of Zombie Corporations they are allowed to fail aand make room for others to take their place.
javajolt1
Wed, Oct 6, 2010 : 12:47 p.m.
A sad demise for Borders and Blockbuster. Two once proud companies that have become victims of a failure to keep pace a retail environment that changes almost daily. They were leaders. It didn't have to happen. It's too late now. Lack of management continuity, huge losses and lack of focus on their core business has placed these companies in their respective final death throes.