All Forum Posts by: Nick Button

Investment Info:

Industrial commercial investment investment in Carlsbad.

Purchase price: $3,250,000
Sale price: $4,600,000

Identified, built, and marketed “Creative” flex-office improvements to attract progressive flex-office/industrial users from the Carlsbad and surrounding submarkets. Building and industrial suites were previously “black-listed” and deemed “too tired” and functionally obsolete by the brokerage and tenant community.

Through thoughtful and strategic sourcing, we were able to complete high-style “creative” flex- office design for nearly ½ the cost of competitive landlords.

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

-Coastal location.
-Acquired below replacement cost.
-Saw an opportunity to profitably reposition an old, tired asset.

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

Broker relationships

How did you finance this deal?

Combination CMBS debt and private equity

How did you add value to the deal?

See description above and pics below

What was the outcome?

-Significantly improved the building, neighborhood, and tenant profile.
-Created a backlog of demand for industrial/flex space where none existed prior.
-Sold as a part of a larger portfolio sale, at a significant profit and return to investors.

The Deal

I have a verbal contract for two industrial buildings in Wyoming (Cheyenne and Casper, the two largest cities).

I am very motivated to move forward on this deal, but do not have the full 25% down payment. I am looking for an equity partner who will co-invest and co-own, for a pro-rata return.

Property Details

The buildings are each about 3,500 sf. They are leased to an international tenant, who has occupied the buildings for over 10 years. The tenant maintains the interior and has spent significant amounts on upgrading the buildings, so they are very motivated to stay. The lease expires in one year, but I think the renewal probability is over 95%--otherwise I would not be near this deal. We should be able to bump the rent slightly at renewal.

As a NNN lease, tenant reimburses taxes and insurance, and pays all other expenses including repairs. Even if taxes or insurance move significantly, the NOI is not diminished.

I pro-forma about 9% cap rate.  Targeting about 10% cash on cash return.  Your dollars per hour are far above what you normally see in the residential world because the tenant takes care of everything.

Please message me for more specifics about the pro-forma and other questions you have.

Thank you.

I think you'll have good odds of moving that at an 8cap, NNN lease. Business has good financials to pay rent?

Offmarket you just start with brokers, but don't have them list it. Do you have an OM?