Bridgeview Storage LLC - Value Add Property

[Josh Collins]

Investment Info:

Other commercial investment investment.

Purchase price: $3,400,000
Cash invested: $520,000

Property was a marine services business with 70,000+ SF of indoor storage. We converted the largest buildings to group storage with in-out access for tenants (the buildings used to require the owner to have someone onsite to get their boat out of storage), added outdoor parking stalls and developed the vacant 6.5 acres into Maxi-storage. Property will be a total of 128,000 SF with approximately 85 outdoor parking stalls.

What made you interested in investing in this type of deal?

1000' from another facility of ours which would make it easier to manage.

How did you find this deal and how did you negotiate it?

A broker we have a relationship with reach out to us.

How did you finance this deal?

SBA 504 loan. I have a 50% partner who also put down half of the 15% down payment required for the SBA loan. The expansion project was 100% funded with SBA loan as stabilizing the initial property added enough equity to qualify us for the addition without an additional capital infusion for a down payment.

How did you add value to the deal?

We made the property self-service. We cleaned up the property. We added outdoor parking stalls. We rented out the existing shop areas. We added 56,000 SF of storage and 45 outdoor parking stalls to the 6.5 vacant acres the property came with.

What was the outcome?

Rent up is still happening but is going very well. I expect that we added $1M of value to the initial property and we should add another $1M of equity to the expansion project once it is stabilized.

Lessons learned? Challenges?

Verify contractors' availability and staffing. It seems that nearly all of our contractors had some sort of short-staffing that affected construction timelines. Also, use the most professional contractors you can afford. It will ultimately save you stress and likely money in the long run.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, I worked with Telus commercial real estate brokers out of Lakeland, MN to broker the deal. I also recommend Lake Elmo Bank for financing and TCM CDC for the SBA loan.