Commercial Kitchen Space - Assistance Needed

[Chris Cozzens]

Hello BP, I posted this in another thread, but hoping this one may be more suitable.

I am in need of some advice / guidance. I own a very large food processing company, we are currently renting out kitchen space in an ideal facility. We are reaching this facilities limits in terms of production capacity. Our landlords seem very fair and are looking to retire.

We are currently hoping to purchase the building from the landlords. They are suggesting that we purchase the building with all of the equipment as well( ovens , fridge, tables, etc ) They are giving us a number of 750,000.

My first question is, how do we accurately determine the value of the building along with the assets included? Is this a standard thing for buying a commercial kitchen?

Next, We are looking to put about 160,000 down, Would it be smart to finance the building and the assets with one conventional loan? Or does it make more sense to split it into two transactions, one for the building and possibly seller financing for the equipment?

Lastly, we are also hoping to expand to the west coast very soon as I had mentioned we are reaching capacity limits on this kitchen in the next year or so. We do shipping nationwide and moving the the west would help double our production power and take advantage of lower shipping rates to the west. My initial thought is we would take out an equity line of credit after we buy the first building and leverage that for the second building. That seems too simple for me, so am I overlooking anything legally/logistically with this situation? Also would our decision to finance the building + assets together or separately have any effect on this?

Alright, I know there is a lot in this one topic, any help would be awesome!!

Thanks Guys,

Chris

[Joel Owens]

Chris the equipment unless brand new has nominal value. Would not pay a premium for old equipment.

You need to value the building in one part and the equipment in the other. It's kind of like contractors giving bids. They lump everything together to confuse people on what costs what. It makes it harder to get a good deal.

Old equipment is worth maybe 10 cents to 15 cents on the dollar to the new value of what you can buy in the marketplace. You need to look at warehouse comparables in the area listed for sale and solds to get a cost per sq ft.