What Is A Retail Outparcel Release?

A retail outparcel release is a provision that you can work into your loan documents. To begin, lets define what an outparcel is.

An outparcel is a piece of property/land that is located near a major store, plaza or mall (but not physically attached to it).

For example, most Super Wal-Mart's are surrounded by other stores that are not physically attached to it. These are outparcels.

Now lets define what an outparcel release is!

You are the owner of a retail development site and you used the entire development as collateral for your CMBS loan. The terms for a CMBS loan are pretty much written in stone and are very difficult to change after the loan has closed. Why would you want to change the mortgage committment?

You currently have a major anchor and the outparcel's are all leased out. Then one of the outparcels becomes vacant and you can't get it leased. If you could renovate the outparcel to accomodate a new tenant you could get it leased quickly. But if you didn't pre-plan for this scenario and had a partial release of the retail outparcel site written into your loan, then you are stuck because most loans have limitations built into them, which limits any changes to the property.

So if the loan is structured on the front end to allow for construction (doesn't mean that you have to do construction but gives you the option in the future if you think it is needed) changes, then this would allow you to renovate the outparcel to accommodate new tenants, without having to re-work the loan.

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