Off Market Special Situation: 65K SF Class-A Mixed-Use Building from Forced Seller

[Benjamin Spiegel]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $8,500,000
Cash invested: $3,450,000

Off-Market Acquisition Overview
This property was acquired from a motivated seller at a 20%+ discount to market value.

Property Details
- Size: 64,000 SF Class A mixed-use building
- Commercial Space: 25,000 SF
- Residential Space: 39,000 SF (32 duplex apartments, 2BD/2BA)
- Parking: 165 spaces

Vacancy and Rental Status
35% of the prime commercial space (about 10,000 SF) was vacant and not marketed for rent online. 13 of the 32 duplex apartments were rented at 35% discount to comps

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

Acquisition Details:
I. Off-market special situation acquisition from a forced seller at a 20%+ discount to market.
II. Subject asset is a 64,000 SF Class A Mixed-Use building comprised of 25,000 SF of commercial across 10 units, 39,000 SF residential across 32 2BD/2BA duplex apartments, and 165 parking spaces.
III. 35% of the high-demand prime commercial space (~10,000 SF) was vacant at close and was never marketed for rent online.
IV. Apt rents 40% below market

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

Off-market pocket listing from a long-time broker relationship

How did you finance this deal?

"Soft" Bridge loan from Midwestern Life Insurance Agency.

How did you add value to the deal?

3 Months Post-Close Update:
I. Commercial: LOIs signed to lease 50% of the vacant space and project to lease the remainder by Mar-25.
II. Residential: Turned 3 units with tenants moving out at lease expiration and increasing rent to market ($2,850/month). The current in-place average rent for renovated units is $2,550, and the unrenovated is $2,150. Will turn remainder within 9-months
III. Solar Roof Lease: Entered into 20-yr agreement at $10K/month to lease roof

What was the outcome?

At a conservative 6.25% capitalization valuation, the building is worth $16,480,000 in 9 months based on a run-rate NOI of $1,030,000.

Key Finacial Highlights:
- Projected Total Revenue Potential: $1.15M to $1.7M, reflecting a 48% increase.
- NOI Growth: From $603K to a run-rate of ~$1M within the first 12 months, marking a 73% improvement.