All Forum Posts by: Andrew Tripp

So, I am actually considering a passive investment in a land deal for a parcel adjacent to a planned ADC.  What we're being told in the investment materials is that the end users are likely to be some sort of automotive uses that service Amazon's fleet.  Firestone/Jiffy Lube/Merlin's or some sort local operator who is tied in at the national level with Amazon are the examples we are being given.  Kind of a cross between retail and light industrial.  But all of the traffic will be almost exclusively from the ADC.  Some other light industrial uses that might come are the suppliers/service techs specific to the ADC equipment, which I understand to be pretty highly specialized.  They need to be pretty close by.

Again, this is all second hand, but that's what we're hearing from the sponsor team.  

Definitely in for this.  Great ideas here!  I can do Wednesdays at 4 Eastern.

I think I know the answer to this already, but is there anything in the commercial real estate lending space that is equivalent to say a HUD 203(k) loan product? Something that would let an owner occupier acquire the asset and also finance some amount of rehab costs above the as is appraised value of the building?

On a related note, anyone out there ever done an office hack?  I'm looking at maybe doing something like this locally with a small office asset that is significantly undervalued but has some really good bones.   Would be interested in hearing from others on this experience.  Thanks in advance! 

Industrial investor here, would definitely be interested in something virtual (I'm based in Chicago).  

Looks like a great value-add deal!  Would be curious to hear where you exit.  

I would also add that you’re best off finding a small, local bank who’s got some commercial real estate presence in the market you want to enter.  At a granular level though.  Like have they lent in that particular town where the asset is located?  A good local broker should be able to make an intro or two.  Look for fully stabilized assets in overlooked submarkets if you are shopping in major metros.  These won’t have much value add or appreciation.  But you’ll get started and get some cash flow and management experience.  

For partners, look for a few people that are also looking to be active industrial owners and are willing to take some recourse on the loan with you.  The collective guarantor strength will make you more attractive to a lender.  Try to get some folks with some real estate investment experience and high paying day jobs.

Different landscape from multi family.  Not nearly as much debt (or equity) sloshing around in this space.  You’ll see seller financing from time to time (although in my experience that usually only happens if there is some hair on it), but banks are pretty much the dominant lenders here.

@Keith Resnover - Hi Keith, DM me and we can talk if it makes sense.

We're a primarily multi-tenant investor around O'Hare, so Carol Stream isn't too far afield.  I would agree with Ajay, a cap rate probably between 7-8% seems about right.  Well leased Class B stuff in DuPage looks to be in pretty high demand by both users and investors.  Not sure where it is in Carol Stream, but lower taxes but still good access to the airport and interstate highways and last mile capabilities.  Skilled labor pool is deep as well for more manufacturing-oriented users.  Lot of good drivers for industrial investment in that area (and that submarket in general) in my view.

We're actively looking in some select Chicago submarkets (O'Hare/Northwest Suburbs/I-290 corridor).  Small bay stuff, 10K to 50K.  Up to about $5,000,000 in value.  Above that size/value profile, very hard for more entrepreneurial outfits like ours to compete with institutional-level money.  We look for both stabilized, cash flowing assets and value-add repositionings.  We like multi-tenant better than single-tenant, but we will look at both types.  We'll do business with just about any kind of tenant, but we like advanced manufacturing, construction companies, air freight and flex R&D.  Basically the suppliers to the suppliers, and maybe another step down from that. We're looking at taking a similar approach in a few other markets.  Dallas, Kansas City and Indianapolis, possibly.  

I don't see any way industrial slows down in the 2021 short of some sort of major banking-related meltdown that hits everyone.  Of the four major real estate food groups, it probably has the clearest horizon this year.  Multifamily is still probably the best bang for the buck in terms of risk in the long term, but the eviction moratorium complicate things a little in the short term.  Some changes coming to office and retail that aren't entirely clear yet, and are not likely to get sorted out in 2021.  

If anything, the industrial market may overheat a bit in 2021.  Once the pressure eases on the rest of commercial real estate, it should normalize a bit in 2022 I think.

We are looking at a value-add acquisition of a 33K sf warehouse asset that is currently owned by a user who is consolidating operations at another location and vacating at closing.  We would be dividing down to 4 smaller units, all separately metered and demising walls in place, and then renting them out individually.  The play in our market is to rehab what is considered a vacant building to obtain a pretty lucrative real estate tax incentive that makes the fully stabilized building much more attractive to an investor.  So we are developing a pro forma model for a redevelopment type scenario where are bunch of capex goes in up front to get the units back to market.  We have not supervised this level of rehab before.  A few items that I was wondering whether anyone has had any direct experience with on the construction side (understanding some of these things are very market-specific):

- Asphalt parking lot replacement - looking at about $5.00/sf for this

- Concrete aprons around the docks - there are 4 front dock doors, and some of the aprons needs some patching/replacement.  I don't think they all need to be replaced, but what would be a good psf number for replacement so we can ballpark it?  We've got about 20K all in set aside right now. 12.5 foot clear ceilings btw.   

- Fire sprinklers - looking at about $5.00/sf for this.  Quotes seem be anywhere in the $2.00 to $7.00/sf range.

Also, somewhat related, what do people think is the best source for what would be a construction/mini perm type of loan product, where there would be an interest only (6-18 months or so) component then a 3-4 year maturity after conversion/stabilization.  We have some relationships with the local/regional banks that do these types of loans.  A couple credit union prospects as well. But wondering if there are other non-traditional debt providers out there that concentrate in this space that I'm not thinking of.

Any thoughts would be appreciated.  Thanks in advance!