Deal Analysis - Multi-tenant Office Building - C-Class

[Derek Lee]

Hi BP Community,

Thanks ahead of time for your input. Would love to hear your thoughts on the following Multi-Tenant Office Space Deal that recently fell out of contract. It’s a C-Class Multi-Tenant Building located in a low population city, which makes me concerned about volatility.

Based on my underwriting and the seller's firm price, this deal will trade at a 7.6%. Based on input from a Lender it should be trading at a 8-9% cap..

Again, thanks for your input!

Location: Mid-South

Class: C

Units: 20 Office units; 200-400 sqft

Building Interior Space: 6,600 sqft

Tenant Mix: Consultants, Counselors, CPAs, Lawyer, RE Agent

Occupancy: 85%

Characteristics: Slab, Metal siding, concrete parking lot, 2 floors, 3/4 renovated

CapEx: Roof 3 years, 2/4 HVACs replaced, no major upfront fixes based on inspection report

City Population: 16k

County Population: 86k; average 0.93% annual growth over the last 10 years

County Unemployment Rate: 2.3%

Job Growth: Not able to find current Data, can’t verify how Covid affected.