Challenge

During the escrow process, the agents were able to use a BOMA calc to have the building remeasured and were able to capture over 10% of additional rentable square footage. This increased potential top-line revenue for the site and lowered the cost basis per square foot, which allowed for a lower PSF NNN charge to the tenants.

 

Strategy

After the close of escrow, the agents coordinated $275,000 of CapEx and TI, which included the roof, parking lot, exterior paint, landscaping, and upgraded / new office tenant improvement packages. The agents were able to get lease rates ranging from $1.45 NNN to $1.55 NNN and reach a stabilized return on cost of nearly 8.0%.

 

Results

10149 Channel Road was a value-add multi-tenant investment the agents sold for $3.3M with a majority of the rent roll on short-term and month-to-month leases. The project was financed with a bridge loan and was taken out once all leases were up and construction had been completed. The stabilized loan was completed at 70% LTV. They secured a 12-year lease with a full campus user, locking in a long-term above-market return. This property is currently operating at an in-place 6.9% cap rate.