# Shoppes at San Felipe — Mark-to-Market Cap Rate Analysis

**As of:** 2026-05-21
**Source rent roll:** SF/Voss LTD, 4/30/2026 (NewQuest)
**Source NOI:** OM Financial Package, Annual CF (NOI) — Year 1 pro forma

---

## Headline

Marking the in-place rent roll to market and stabilizing the two vacant suites lifts NOI by **~$418K (+22%)** and the going-in cap rate by **~95–100 bps**, net of capitalizing $1.53M of TI/LC into basis.

| Metric | Today (in-place) | Stabilized at market | Δ |
|---|---:|---:|---:|
| NOI | **$1,887,280** | **$2,305,177** | +$417,897 (+22.1%) |
| Going-in cap (Purchase Price) | 5.94% | 7.26% | +132 bps |
| Going-in cap (PP + TI/LC) | 5.94% | **6.93%** | **+98 bps** |
| Going-in cap (Total Basis + TI/LC) | 5.81% | **6.77%** | **+97 bps** |

---

## Assumptions

| Input | Value | Source |
|---|---|---|
| Purchase Price | $31,750,000 | LOI / Operating Model C6 |
| Acq + closing | 2.36% | OM C7 |
| Total Basis | $32,499,935 | C6 × (1 + 2.36%) |
| Building GLA (excl CVS pad) | 48,196 SF | Rent roll |
| Occupied SF | 42,690 (88.6%) | Rent roll 4/30/26 |
| Vacant SF | 5,506 (Suite 260 + 1415) | Rent roll 4/30/26 |
| CVS ground lease | $385,000 (held flat) | OM |
| Yr 1 opex (NNN, ~80% recovered) | $754,919 | OM Annual CF |
| **Market rent — blended inline** | **$42.00 PSF NNN** | Recent comps* |
| **TI/LC** | **$40.00 PSF** on rolled SF | Per request |
| Vacancy / credit loss (stabilized) | 5% on retail | UW convention |

*Market rent triangulation: Clara Rose new lease 7/25 @ $40; European Wax renewal 6/26 @ $40; Alloy 9/24 @ $45; Ozone Bar 11/24 @ $41.82; OM commentary "rents ~21% below market" (implies $40–42 blended). F&B endcap comps (Brassica $65, Wild Fork $61) are held above market — no roll required.

---

## Mark-to-Market Bridge (tenant-level)

### Tenants below market — roll to $42 PSF on rollover

| Suite | Tenant | SF | Cur PSF | Δ PSF | Annual uplift | Expiry |
|---|---|---:|---:|---:|---:|---:|
| 200 | Salon Lofts | 6,094 | $23.00 | +$19.00 | $115,786 | 10/32 |
| 150 | Heights Wellness | 3,707 | $31.00 | +$11.00 | $40,777 | 2/33 |
| 230 | Amerejuve Medspa | 1,839 | $21.00 | +$21.00 | $38,619 | 7/29 |
| 280 | School of Rock | 2,462 | $29.70 | +$12.30 | $30,283 | 5/29 |
| 225 | Amazing Lash Studio | 2,250 | $29.10 | +$12.90 | $29,025 | **11/26** |
| 135 | Piola | 2,670 | $33.00 | +$9.00 | $24,030 | 11/27 |
| 100 | Distinct Dental | 2,500 | $32.50 | +$9.50 | $23,750 | 7/33 |
| 170 | Isle Pedi Spa | 2,695 | $34.03 | +$7.97 | $21,479 | 4/33 |
| 220 | Bonck Group | 1,275 | $27.00 | +$15.00 | $19,125 | 6/29 |
| 160 | European Wax Center | 1,421 | $32.67 | +$9.33 | $13,258 | 5/26 (signed @ $40) |
| 110 | UPS Store | 1,235 | $38.00 | +$4.00 | $4,940 | 11/31 |
| 115 | Clara Rose | 1,690 | $40.00 | +$2.00 | $3,380 | 7/30 |
| 1413D | Jersey Mike's | 1,250 | $40.10 | +$1.90 | $2,375 | 9/31 |
| 130 | Ozone Bar | 1,690 | $41.82 | +$0.18 | $304 | 10/29 |
| | **Subtotal — MTM** | **32,778** | | | **$367,131** | |

### Vacant lease-up at $42 PSF

| Suite | SF | New rent |
|---|---:|---:|
| 260 — Vacant Retail | 2,307 | $96,894 |
| 1415 — Vacant Inline | 3,199 | $134,358 |
| **Subtotal — lease-up** | **5,506** | **$231,252** |

### Tenants at/above market — no roll

| Suite | Tenant | SF | Cur PSF |
|---|---|---:|---:|
| 120 | Alloy Personal Training | 1,575 | $45.00 |
| 1413A | Brassica Sandwiches | 3,000 | $65.00 |
| 1413C | Clean Juice | 1,253 | $45.00 |
| 1417 | Wild Fork Foods | 4,084 | $61.21 |

### Gross rent bridge

| | $ |
|---|---:|
| MTM uplift (existing tenants) | $367,131 |
| Vacant lease-up | $231,252 |
| **Total gross rent uplift** | **$598,383** |

---

## NOI Bridge

| | Today (Yr 1 PF) | Stabilized @ Market | Δ |
|---|---:|---:|---:|
| Retail base rent (incl steps) | $1,682,017 | $2,180,170 | +$498,153 |
| CVS ground lease | $385,000 | $385,000 | — |
| Expense recoveries (~80% of opex) | $604,360 | $603,935 | (~flat) |
| Other / signage | $3,120 | $3,120 | — |
| Vacancy / credit loss | ($32,298) | ($109,008) | (5% stab.) |
| **EGI** | **$2,642,199** | **$3,060,096** | +$417,897 |
| Operating expenses (NNN, flat) | ($754,919) | ($754,919) | — |
| **NOI** | **$1,887,280** | **$2,305,177** | **+$417,897 (+22.1%)** |

---

## Cap Rate Bridge

**TI/LC capital required:**

| Bucket | SF | $/SF | Capital |
|---|---:|---:|---:|
| MTM rolled tenants | 32,778 | $40 | $1,311,120 |
| Vacant lease-up | 5,506 | $40 | $220,240 |
| **Total TI/LC** | **38,284** | $40 | **$1,531,360** |

| Scenario | NOI | Basis | Cap Rate |
|---|---:|---:|---:|
| Today, on Purchase Price | $1,887,280 | $31,750,000 | **5.94%** |
| Today, on Total Basis | $1,887,280 | $32,499,935 | 5.81% |
| Stabilized at market, on PP | $2,305,177 | $31,750,000 | 7.26% |
| Stabilized at market, **PP + TI/LC capitalized** | $2,305,177 | $33,281,360 | **6.93%** |
| Stabilized at market, **Total Basis + TI/LC** | $2,305,177 | $34,031,295 | **6.77%** |

**Cap rate uplift, net of TI/LC: ~95–100 bps.**

---

## Sensitivity — Market Rent Assumption

Going-in cap moves materially with the market-rent assumption. Conservative case ($40) still produces ~80 bps of uplift; aggressive case ($45) gets to ~130 bps.

| Mkt PSF | Stab. NOI | NOI Uplift | SF Rolled | TI/LC | Cap (PP) | Cap (PP+TI/LC) | Δ bps |
|---:|---:|---:|---:|---:|---:|---:|---:|
| $38 | $2,171,536 | +$284,256 | 32,419 | $1.30M | 5.94% | 6.57% | +63 |
| $40 | $2,235,479 | +$348,199 | 33,654 | $1.35M | 5.94% | 6.75% | +81 |
| **$42 (base)** | **$2,305,177** | **+$417,897** | **38,284** | **$1.53M** | **5.94%** | **6.93%** | **+98** |
| $45 | $2,414,287 | +$527,007 | 38,284 | $1.53M | 5.94% | 7.25% | +131 |
| $48 | $2,531,456 | +$644,176 | 41,112 | $1.64M | 5.94% | 7.58% | +164 |

---

## How the lever gets pulled

| Year | Rollover SF | Cumulative MTM captured |
|---|---:|---|
| 2026 | 3,671 (Eur Wax, Amazing Lash) | $42K |
| 2027 | 3,923 (Piola, Clean Juice) | $66K |
| 2028 | 0 | — |
| 2029 | 7,266 (School of Rock, Bonck, Amerejuve, Ozone) | $108K |
| 2030 | 1,690 (Clara Rose) | $3K |
| 2031 | 5,684 (Church, JM's, UPS) | $7K |
| 2032 | 6,094 (Salon Lofts) | **$116K** |
| 2033 | 12,986 (Heights, Isle Pedi, Wild Fork, Distinct Dental) | $126K — major inflection |
| 2034 | 1,575 (Alloy — at market) | — |

Lease-up of vacant (5,506 SF) is **immediate-action upside** — does not require waiting for rollover. Quick-win MTMs in '26–'27 (Amazing Lash, European Wax already signed, Piola if not renewed) deliver ~$100K in the first two years.

The 2033 cluster (12,986 SF) is the structural inflection — aligns with CVS ground lease expiry, creating the optionality for higher-rent renewals or ground-up redevelopment.

---

## Take-away

The deal pencils at a **5.94% going-in cap** on in-place. Executing the mark-to-market thesis — straightforward NNN inline retail at Houston Inner Loop rents — drives the stabilized basis cap rate to **~6.77–6.93%** after capitalizing **$1.53M of TI/LC** ($40/SF on 38,284 rolled SF). That's a **~100 bps cap-rate pickup for ~5% of basis** in incremental capital.

Most of the rent gap is concentrated in three tenants (Salon Lofts, Heights Wellness, Amerejuve = 11,640 SF, $195K of the $367K MTM total). Salon Lofts at $23 PSF is the single largest below-market position; even a partial roll to $35 PSF generates +$73K alone.