Real Estate Investment Opportunity

[cwelsh 1,556]

For those that don't know, my firm also runs several commercial real estate properties in the US.  From time to time a new one comes on board that we like to share with our investors and potential investors.

 

We have under contract a 55,000 square foot building in College Station, Texas (see 3101 University Dr E, Bryan, TX 77802 - Office for Lease | LoopNet).  

 

It used to be a Wayfair call center, but it is currently unoccupied.  The property is quite close to Texas A&M University, on one of the main streets (University) in town.  

 

We are currently in negotiations with Texas  A&M University to lease the entire property.  However, those negotiations will not be finalized until the end of Q1 next year.  Given that the property owner's loan (and other issues) are coming due at the end of the year, they are very eager to sell.  

 

We originally put the property under contract for $7.5m (sellers asked for $10m).  However, we canceled the contract when we realized that the status of the lease is up in the air with A&M.  The seller's called back and asked what we buy it for and we tossed out $6.5m assuming we'd be laughed out of the room.  To our great surprise, they accepted, provided closing could occur by the end of the year.  This means we have to take the property down for cash.

 

 

Due diligence is done (title, inspections, etc).  IF (and right now its an if), Texas A&M takes the entire property down, it becomes an incredible deal.  The property itself is over 10 acres and the entire back can be developed (which we plan to do).  If Texas A&M does NOT take the property down, it will be leased as medical office, as it is in the medical office district.  Our local partner/sponsor is a doctor who spent the last few years improving the Physician's Center in College Station (http://thephysicianscentre.com).  We are quite confident this can occur over the next three years.  Given the property will be taken down for cash, there is very little carry cost as well.

 

The basic terms of the deal are as follows:

 

Purchase Price:  $6.5m

Needed outside investor capital: $4.5m

Investor Pref Rate: 8%

Waterfall: 60% investors (after pref) 40% to GP

Management fee: 1% (after cash flow positive)

Leverage:  No leverage for the purcahse of the property, bank loans will be used to do tenant improvements and buildouts if needed

 

I normally am not interested in unoccupied property.  But this is a large piece of land, with development opportunity, that has a TON of potential, with low carrying costs.  

 

If you have any interest, or more questions, please email me at cwelsh@lorintinecapital.com