Rouses Markets

This two-property freestanding grocery portfolio was purchased in 2021 for $4,600,000 and is currently occupied by regionally-dominant grocer, Rouses Markets. JRE sourced this portfolio off-market through one of its affiliates, who brought it directly to them. Built in 2015 and 2016 (respectively), these buildings were originally occupied by a small grocery chain called Frank’s Supermarkets. To the outside eye, these assets appear to be in undesirable markets based on low demographics and geographical isolation, but make no mistake – these are VERY strategic locations. They were built specifically to service the operations of Port Fourchon, through which 95% of the oil rigs in the Gulf of Mexico are serviced. Port Fourchon serves as a base of operations for over 250 petroleum and oilfield servicing companies operating in the Gulf, and also is the access point for the LOOP (Louisiana Offshore Oil Port), located about 20 miles south of the port. LOOP provides tanker offloading and temporary storage services for crude oil transported on some of the largest tankers in the world, handles 13 percent of the nation’s foreign oil, and connects by pipeline to 50 percent of the U.S. refining capability.

These areas are extremely important to the national security of the United States, and will have “boots on the ground” for a very long time. These “boots” need food. With literally ONE road connecting Port Fourchon to the rest of the world (and these stores being in its critical path), they are literally “feed the gulf,” as nearly all of the food going out from Port Fourchon comes from one of these two grocery stores. In addition – one of the country’s premier fishing destinations is Grand Isle, LA, sits just past Port Fourchon. Tens of thousands of tourists flock to Grand Isle, year round, to enjoy great fishing and some of Louisiana’s ONLY beaches!

Because of some unorthodox lease structures, JRE was able to acquire these assets at a price that allowed for an almost unheard of 11% cash returns for creditworthy free-standing grocery! After a year of ownership, JRE was able to successfully renegotiate the leases with Rouses in a unique way that added value to both tenant AND landlord. By changing the rent amount in exchange for some concessions from the tenant, JRE was able to add about $1,000,000 in value to this asset with a simple lease amendment, increasing the expected IRR for this investment from 12.23% to well over 30%!