Office Building - Would you pursue this deal?

[Emilio Ramirez]

I think I've answered my own question, but figured I'd throw this out to the good people of BP. 

While searching for a MF deal, I came across a (NNN) class a office building, The attractive part to me was that the anchor tenant would sign a 10 year lease as a condition of closing and provide a corporate guarantee. Additionally, they would provide a guaranteed 8 cap on the purchase price.

I haven't pursued the deal much further due to a couple items.

1. The income is based on rent that is top of the market by the anchor tenant. Although, they've indicated that they will negotiate a lower rent  and lower noi to Market rent which is a few bucks lower and thus a lower purchase price.  $31 current -$26 market. 

2. The anchor tenant represents 85% of income. This is my primary concern. The anchor tenant appears to be a strong national company with a corporate guarantee, but I still have a little voice in my head saying that if they go out of business you're toast.  

According to my calcs. Here's a few numbers.

NOI - $335,998

Cash Flow After Debt Service - $104,049

Cap Rate at Purchase - 8.4

Average COC - 17.1%

Debt Coverage 1.44

IRR - 15.79%

I like it because there is decent cash flow from day one, no heavy lifting to reposition the property and (NNN). I would make any offer contingent on a lease agreement executed at closing but even if I got everything I wanted in lease negotiations, I still can't seem to get past item 2 above. Any thoughts? What would make a better 1st office building investment?