How Cyndi Peach Uses Retail Strip Centers to Build Long-Term Cash Flow

Cyndi Peach (00:00)
Early 2000s, we had the internet bubble and I realized there was a huge layoff at the company and I realized that having a single point of income is a single point of failure. And in the tech world, you don’t want that, nor do you want that in your own finances.

We decided to go out and start creating additional income streams. And not only for backup plan in case the tech thing didn’t work out, but also as a way to build and grow our wealth so we could enjoy an early retirement.

Dylan Silver (02:10)
Hey folks, welcome back to the show. Today we’re joined by Cyndi Peach, a former Intel executive turned commercial real estate operator and investor. After spending 30 years helping drive strategy and emerging technology initiatives at Intel, she transitioned into acquiring and operating necessity based neighborhood retail centers through Nexphase Venture Partners with a focus on strong cashflow, disciplined execution and full cycle investor returns. Cyndi

Thank you for joining us today.

Cyndi Peach (02:40)
Thank you for having me Dylan. I appreciate it. It’s nice to meet you.

Dylan Silver (02:44)
Now, after working at Intel for many, years, what drew you into real estate investing?

Cyndi Peach (02:52)
Well, actually it kind of co-incited with the tech career.

Early 2000s, we had the internet bubble and I realized there was a huge layoff at the company and I realized that having a single point of income is a single point of failure. And in the tech world, you don’t want that, nor do you want that in your own finances.

⁓ We decided to go out and start creating additional income streams. And not only for backup plan in case the tech thing didn’t work out, but also as a way to build and grow our wealth so we could enjoy an early retirement.

So that’s where we started out. We started out like anybody else. We started out in residential rentals. Doing that, it’s easy to do, right? We all rented a home or an apartment. So we started in that area.

We made the flip over to multifamily for a short period and did that. And then we came upon an opportunity for a retail strip center right near where we lived. And we commuted to Intel. It was an hour drive one way. And it was on the way home. We located it and we bought it. And it gave us some kind of feeling good about the investment because we could drive by and see it every day.

It was close by and we took a leap into the retail strip centers. We have never looked back because we found that the tenants there have more of a vested interest than people who are renting just a place to live. It’s their business, their livelihood. The leases are different. They’re long-term and it’s a great opportunity to build out services for the local community also.

Dylan Silver (04:38)
Now you mentioned the leases being different, right? When you have a lease to fill, do you have a set time period that you’re typically looking for or is it very specific to that tenant?

Cyndi Peach (05:38)
Usually the norm is five years to 10 years will be that, you know, you see that quite often, but there are times where you’ll bring in somebody for a shorter term to that. Maybe it’s something that’s a new business they’re starting out or they’re going into a new area. So they’ll want a shorter term lease of maybe two to three years. I’ve seen those, but most of them on most of them, I would say the majority over 80 % of them are five to 10 years.

Dylan Silver (06:04)
Now, when you’re looking for tenants, do you have a preference for corporate national tenants that everybody knows or for something that’s smaller mom and pop? And has that perspective changed over time?

Cyndi Peach (06:16)
You know, I like to do a mix. And the reason why, so when we choose our strip centers, we want to look for it’s in a commercial traffic, high traffic area. Something that’s adjacent or within maybe a shadow center of a Walmart or grocery anchor type of building. We like a mix of local businesses and using that larger anchor building. Tenant

to pull in their clientele and their customers. There’s some challenges. There’s pros and cons. think everybody has a mixed feeling on that. But I like a mix of them. National tenants pay higher rents, but can have more leverage on you because they’re a national tenant. And they also have different kind of caveats in their leases that may be challenging for the owners, the operators. Whereas a local business, they’re there to service.

And once again, they have that vested interest, right? So there are two different kind of tenants that, but I like a good strong mix on that. for example, we have one in Kentucky and a smaller rural area. have an Aspen dental and Domino’s and a cricket wireless in there, but I also have a business that services people who have disabilities that are called freedom mobility. they have, they provide

wheelchairs, oxygen and stuff into the local area. that’s heavy on the national tenants versus local. Then I have another one in Wisconsin that’s strongly mixed on local and with only one national tenant in there. So depending on the area.

Dylan Silver (07:53)
Now, when you’re working

with some of the corporate tenants versus someone who’s not corporate and maybe local, is there a difference as far as the expectations they have of the space itself?

Cyndi Peach (08:07)
Yes, for the national tenants and even franchises, I’ll say, they have specific requirements that they need. So they’ll have a specific square footage that they require. They’ll need a signage that there’s certain signage requirements. Local businesses don’t have those restrictions, as you will see, because national is a brand, right? So they have to follow those brand guidelines.

along with the franchisees that they have to follow those franchise guidelines. So they’re very rigid in what they need and what they, power requirements and all that, which makes it easy for the build out. Local tenants, they don’t have that. they, they, they don’t have all those rigid requirements that they’ll put into the lease as you’re building out on it.

Dylan Silver (08:51)
Now, if you’re looking at developing one of these retail opportunities, Are people typically finding the tenants first or at least have an idea of who might be in there before they begin development?

Cyndi Peach (09:06)
Yeah, so we don’t develop so we buy value add so they’re already developed in built out But to answer your question a lot of times what they’ll do is they’ll do a build out and the time they’re building those New developments out they will go in and start leasing ahead before it’s finalized So they already have tenants that have designed and moved in it’s cheaper to do that, right? Because as I mentioned with national tenants, they’ll have certain build out requirements that the need and it’s it’s actually

actually more, it’s easier on the cost for the build developer to build those in as he’s building out the building.

Dylan Silver (10:15)
Now with value add, I’ve had so many multifamily value add investors on the show and there’s things that can do in multifamily everything from property management to amenities, right? To even systems in place, right? In this segment of the real estate space, what does value add look like?

Cyndi Peach (10:20)
Mm-hmm.

Value add is looking at, know, so we’re looking at something that may have some vacancies. A lot of times what we’ll see is they’ll have a larger space that will demise and make it into smaller spaces, adding additional tenants within the strip center. Maybe there’s a vacant pad or an opportunity to build out a pad in the front of this. And so we’ll look at, that’s kind of the value add we’re putting in. Also,

I mean, if you get in value add, you can also go and renegotiate leases, but that’s a timing thing, right? Because leases are based on the time period and then you can go in and upgrade. some people will even consider value add is converting gross leases to moving gross leases over triple net leases. And that’s a value add, but I don’t really use that as a qualifier. I’ll put it as a value add. So we look at something that we can, maybe there’s a large space vacancy in there.

Like for example, we had one in our Wisconsin base. They had a tenant in there that was a 4,000 square feet. A lot of, and especially in the neighborhood strip centers that we, we, purchase, we, know, they need about 1700 to 2200 square feet. So we’ll go in and demise that space, bring in a tenants with a smaller and that builds that out increases that NL I on that. And that actually is a true value add.

Dylan Silver (11:48)
Now, when you’re looking at opportunities and where there’s potential value add, what’s more important, how much room there is for the value add or the location of this potential deal or a combination of both?

Cyndi Peach (12:05)
you know, that’s great. So our buy box, you know, our first pass on our buy back buy box. And I just, we just actually have been incorporating AI to do this. So that’s kind of a, something that we’ve developed. So one of the things that we have in our buy backs is location. Location is key, right? We look at the demographics in the area, you know, you know, which is like a income employers, you know, population, population growth.

So we look at the economy and the area. So location is huge. I mean, that’s one thing you could never change, right? You can always change a tenant. You can’t change a location. location is key. The size of the actual parking lot is important. I’ve run across some great opportunities, but they don’t have any parking. So that’s a no go for me on that. So you have to be able to, so for example, if I had something that’s limited parking,

Let’s say I have a Chick-fil-A that’s interesting in that area. I wouldn’t be able to bring them in because I don’t have the space that they need for the drive-through or the parking for their clientele. So that’s important. So that, you know, the size of the lot and what I have there, availability, even for build out. There are tenants who actually want reserved parking spaces. So that’s something else you got to think about. So location is key. Vacancies is key.

Something that’s already 100 % occupied, if you’re gonna go into that, if you wanna put all cash in on that, that could be an investment for somebody, but not for us. We’re looking to bring in strong Amazon resistant tenants, building longevity for those businesses in there. Also bring in tenants that will pull in additional business for the tenants that already reside in the shopping center. So location is number one important.

I think of everything and then we get into the particulars of what we’re looking for for the mix of tenants in there. And then we get into the nitty gritty when we start doing the due diligence on leases. Because that’s important too because remember we’re inheriting when we purchase the leases that are already in place. So it’s very important to go back through and read all of those because there can be language in there that could potentially, you know, like caps on cams.

They’re not paying for certain common area maintenance expenses that can kill the bottom line.

Dylan Silver (15:08)
Now you earlier mentioned AI and using this to underwrite deals, is that right?

Cyndi Peach (15:13)
Yeah, actually we’re sourcing deals with it. we get in our inbox, we get hundreds of deals. Well, I probably get 50 to 60 daily, just myself. My partner gets some. know, multiply that for the week. You know, we get a lot of deals. There’s not just your typical cruxie delivery mechanisms, but we have worked with brokers on our market deals. And so for us to be able to go through that and

scan those deals and find it out. I have an AI agent that’ll go through. We’ve built an AI agent to scan all that. That’s a way for us to scale. We can look at deals. We have our buy box criteria, first, second and third level on that. So we’ll go through that and scan those deals so we can go in and do a little bit more discovery on it. Whether that’s a personal phone call to the broker or just looking more in the demographics of the area. And then we also have AI for our underwriting.

We have AI for our pitch creation. So yeah, we’re using a lot of that. that’s just to, you know, not to, you know, I know a lot of people say AI is right and everything. It’s not to write, to speak for us. It’s us to be able to be more productive. So we’re not spending a lot of time on, you know, reading emails and doing that. We’re actually having that AI agent pull from that, scan those deals. And that way we can spend our time.

you’re really digging into the, rolling it up your sleeve on getting more into the due diligence part of those deals and identifying them quickly.

Dylan Silver (16:45)
We are coming up on time here, Cyndi, but I’m curious, bonus question here for you. When you’re looking at all the moving pieces that are involved with these deals, how does property management come into play? And would you say that it’s as important, more important, more challenging, less challenging than say, multifamily property management?

Cyndi Peach (17:11)
I think it’s a can make or break an investment. The property management you’re working with. And it’s the same thing with multifamily. I think that’s one of the challenges is identifying those partners as property management companies that you’re working with. Since we do nationwide, it’s really important for us to have a solid property management company. And ⁓ we have dealt with really bad ones and it’s cost us, it’s cost us tenants. It’s cost us on the bottom line. It’s cost us.

across the board. it could really ruin investment and a good property manager that’s there. have one that’s in Wisconsin. I’m so glad we were able to find them. They’re such a great partner. When we had a tenant who unfortunately made some bad business decisions and bailed out of the building and kind of the space, they quickly helped us identify another.

restaurant and if restaurants are hard to find and get in there and get them up and running they they were their leasing department was Superb and helping us identify a new tenant We have someone in there and we’re in the process of building out. It was so quick They did it within several months So getting good partners that have those good relationships where they’re where they’re at a proper management company I tell you that’s number one before we even look at that. That’s one of the things we actually in our

criteria when we’re looking at it is who’s a good property manager in the area, because that’s who we want to identify to partner with in that location.

Dylan Silver (18:38)
We are coming up on time here, Cyndi, any new projects that you’re working on and then as well, anything you’d like to say directly to our audience.

Cyndi Peach (18:45)
Yeah, so we’re excited. actually, we’ve been doing individual products, investments. We’re actually going to start, we’re starting a fund where they’re in process of building that out. ⁓ But one thing I find when I’m talking with investors is that they’re not very, people are a little bit more comfortable with multifamily because they understand how that works. We’ve all rented an apartment, right? In some point of our time and our journey in life. But retail is a little bit a new type of asset they’re not familiar with.

So I have an ebook that’s coming out here in the next couple of weeks that’ll help walk investors through, educate them on kind of some of the things I’ve spoke about here. You know, not just how we do and identify deals, but what it’s all about, what the market looks like, how we see it, the market the next five to 10 years. And then also as a bonus for them, I’ve put in a actual checklist that they should be asking. They can use it on any deals actually. So there’ll be operator questions you should be asking your operator, the syndicator or the fund manager.

but also specific to retail. What they should be looking through when they’re, when they look at an investment, what are the red flags that they should look for? So questions to ask, why they should ask them and what the red flags are. And that’s part of this ebook that’ll be coming out. It’ll be available on my website. You can find my website. It’s really easy. investwithpeach.com. Go look at that. It’ll be available here. I do believe it’ll be out in the beginning of June. We’ll have it up on the website. Once you go out to the website, you’ll be able to

Download it from there and you can use it to educate yourself on you know, if you’re interested in finding out more about investing in retail strip centers

Dylan Silver (20:18)
Cyndi, thank you so much for joining us today. Thanks for your time.

Cyndi Peach (20:21)
Hey, thank you. appreciate it so much. Thank you.