Seeking investors for strong multi-tenant flex bldg. | LB, CA

[Michael Knudsen]

Hello BP.  Through my brokerage services, I recently uncovered an off-market, multi-tenant commercial acquisition opportunity in the city of Long Beach that I felt was worth pitching to our community.  Below please find the salient deal points:

• Asking Price: $3.7MM | In-Place Cap: 7.1% | 100% Occupied | NNN Leases | ~15,000 Bldg. SF | 48,000+ SF lot | Signalized Corner
• Newer construction with no substantial deferred maintenance: Built in the late 1970's, the property has been very well maintained by the current owner. There is no material deferred maintenance, and the roof, plumbing, electrical and HVAC systems are all in solid condition.
• Functional "flex" facility: While the property is located in a heavily industrial area with immediate freeway access in close proximity to the booming Port of Long Beach and features ground-level roll up doors that are appealing to industrial tenants, the property also has many attractive qualities that appeal to conventional retail tenants, including:
  • Prominent location on a hard, signalized corner featuring over 65,000 combined vehicles per day 
  • Excellent visibility and frontage 
  • Ample parking (60 dedicated surface spaces at a ratio of 4.25/1,000 of rentable SF)
  • Located along a major bus line and only one city block from a Metro Blue Line stop, which drives additional potential customers to the site
• Strategic location: The property is only a few miles from the Port of Long Beach, and is also located on one of the primary east-west arterial roads connecting the predominantly residential and retail districts in the South Bay with the region's industrial zone. The fact the property is located in a predominantly industrial area is a net positive in my mind, as the immediate trade area is very under-served with regards to competing retail properties -- this is evidenced by the fact they are several long-term tenants who have been operating out of this location for decades.
• Immediate freeway access: The property is located a block from a major 710 Freeway interchange, which is an appealing traffic driver for retail tenants, and a convenient feature for light industrial tenants who want quick access to and from the port.
• 100% occupied center with strong mix of tenants: The rent roll features an excellent mix of both local mom and pops to regional and national credit tenants. One tenant is a large staffing firm that has over 20 locations throughout the Southland, while another tenant is an international, vertically integrated engineering consultancy that has 61 locations worldwide. A popular local restaurant has been an anchor tenant in the end-cap space since 1989. A local insurance agency just spent $40,000 of their own money for tenant improvements in their space. While there would be some potential rollover risk during the first year of ownership, the owner is willing to offer a rent guaranty in the form of a credit up front to compensate for this.
• Strong cash flow: The stabilized property is available at a 7-7.5% cap rate on in-place income, which has become exceedingly difficult to find in today's highly compressed property market throughout Los Angeles County.
• Below-market rents: The average monthly rental rate of $1.39 PSF NNN is below market, offering potential rental upside.
• High demand for space in facility: According to the current owner, he gets calls from prospective tenants off his leasing sign at the corner "on a daily basis" -- this allows him to line up backup tenants in the event he ever loses a current tenant on a rollover.
• Stable, long-term bonus income from billboard and telecom equipment: The annual NOI features over $23,000 generated from a prominent billboard sign and telecom equipment -- both of these leases have been in place since 1985 and 1998, respectively.
• 100% reimbursable, passive "NNN" leases: Every tenant is on a triple net lease -- each one includes provisions that pass through 100% of the operating costs associated with the property to the tenants, including any increases basis for property taxes and property management expenses. The current owner is willing to manage the property for up to a year to help during the transition until you are able to identify a long-term property manager for the site.

I am interested in investing my own money into this deal ($50-100K), and I am seeking additional investors to meet in person and explore the possibility of partnering on this transaction.  The cash flow is solid, and the long-term appreciation potential is tremendous.  Please email or call if you are interested in exploring this opportunity.