Redeveloped Auto Shop into a STNL Burger King

[Clayton King]

Investment Info:

Retail commercial investment investment in Albuquerque.

Purchase price: $650,000
Cash invested: $10,000
Sale price: $1,420,000

I redeveloped an old run down automotive property into a single tenant net leased Burger King. The operator was a franchisee with approximately 30 restaurants in New Mexico. My responsibilities included demoing the existing structure and doing any environmental remediation. I signed a 20 year ground lease with 10% bumps every 5 years and sold the property to an investor out of Utah for a 5.25% cap rate.

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

I specialize in retail real estate in New Mexico and saw this piece of property as an under utilized piece of property with strong potential for redevelopment.

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

Found it through a broker in the firm I was a part of. I used him to negotiate the purchase price. Asking was $750K and I purchased the property for $650K.

How did you finance this deal?

Did a short term loan with a local bank.

How did you add value to the deal?

I signed a ground lease of $75,000 a year with a financially strong Tenant that would trade on the capital markets

What was the outcome?

Bought the property for $650K and sold it for $1,428,000

Lessons learned? Challenges?

Always carefully study the survey. This piece of property had a brick wall at the northern end of the property. To the uneducated eye, it would obviously be the northern property boundary. That was not the case with this property... the property line was actually 20’ south of that property line.