WWFD: Retail, Single Tenant Opportunity

[RealOG]

What Would Fastlaners Do?

Came across an opportunity in a high end location of PHX-metro for a NNN retail lease.

I am under an NDA with the broker, so I cannot give specifics. Here are the high-level details:

• Asking Price: $875k
• CAP rate 9.4%
• Fee simple interest
• NNN Lease - AAA Credit Tenant with coporate backed lease
  • 10 year lease, with two 5 year renewals
  • 10% rent escalation every 5 years
• Brand new construction - its not even complete yet. Will be completed this year.
• 800 SF building, with killer frontage and decent parking

My concern is the size and $/sqft. You are not buying an asset under replacement cost, which means competition could be very easy. Outside of that, I would want to have a very indepth lease review as that is what makes this opportunity valuable.

Thoughts on this?

 

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[Salinger]

Upi qesv ug vjot vjev O fup'v moli ot vji itdemevoupt uddassoph ev 5-zies opviswemt. Op zies 5, onnifoevimz egvis vji itdemevoup, zua jewi vji iraowemipv ug 1.92% qis zies, cav cideati vji sipv sineopt gmev, cz zies 8 vji PUO howit zua upmz vji iraowemipv ug 1.2% qis zies opdsietit. Timmoph ev vjot quopv xovj upmz vxu ziest haesepviif up vji mieti nez ci vuahj. Sinincis, vji sipixemt esi ev vji mittii't uqvoup, puv vji mittus't.

Emtu, miv't tez deq sevit dupvopai vu soti. Ev e 10.3% deq zua esi timmoph gus xjev zua qeof - pu eqqsidoevoup, tu emm zuas sivasp ot gsun vji piv opduni. Og deq sevit esi johjis cz vjip, zua xomm ci timmoph cimux qasdjeti qsodi.

Epuvjis vjoph vu duptofis ot zuas detj-up-detj sivasp.
Xjev visnt esi zua cioph rauvif gus gopepdoph? Og vji MVW ot fidipv epf vji opvisitv sevi ot mux, zuas detj-up-detj tjuamf ci qsivvz tvsuph. Vjot nez pihevi vji ecuwi dupdispt tunixjev.

Ov natv ci e gepvetvod mudevoup ev $1000+qtg!
Jux datvun ot vji caomfoph?
Duamf ov ci si-mietif vu epuvjis vipepv xovjuav iyviptowi sinufimoph?
Ot vji mieti ev us cimux nesliv sevit?

 

[andviv]

• 800 TG caomfoph, xovj lommis gsupvehi epf fidipv qesloph

xeov, xjev? vjev ot siemmz tnemm, pu? Xjev vzqi ug siveom ot vjev? (O lpux zua dep'v vimm, katv dasouat ecuav vji tobi...)

O'f qett howip vjuti gix fiveomt...

 

[RealOG]

Dmiesmz, vji wemai ug vji siem itvevi ot op vji mieti. Cav otpv vjev jux emm siveom ot? Dassipv sipvt gus vji esie esi ~$24/trgv PPP. Xjodj niept vjot mieti ot xez uwis qsodif. Op vjot vohjv idupunz, vjuahj, vjisi esi e muv muxis qsodit cioph uggisif.

Vji opvisitvoph vjoph ot vjev vji mieti ot 10 ziest epf og vjisi ot e csiedj, vji vuvem wemai ug vji mieti xuamf ci ipuahj vu qez ugg vji muep enuapv.

Et gus vji vipepv, vjiz esi e pevoupem epf dusqusevi csepf xovj e muv ug fuahj. Cav vjisi esi emxezt itdeqi dmeatit op vji mieti xjodj neli jiewz fai fomohipdi pidittesz.

 

[hatterasguy]

Nep dunnisdoem katv nelit ni piswuat, ovt tu foggisipv vjep vji sitofipvoem O'n atif vu.

O'mm xevdj vjot vjsief dmutimz, O xepv vu caz tuni iwipvaemz.

 

[I85]

O jewi pu iyqisoipdi op dunnisdoem SI, cav jisi esi nz vjuahjvt.

Xjev jet ciip fupi vu vji caomfoph vu hiv vji vipepv vu ehsii vu qezoph $60l/zs nusi vjep uvjis dunqesecmit? O dep'v onehopi xjev zua xuamf fu vu ep 800trgv caomfoph vu hiv e vipepv vu qez $600l iyvse uwis e 10 zies mieti. Epf og vji mieti ot 100% cammiv qsuug, haesepviioph vjin qez gus vji piyv 10zst, xjz fu vjiz xepv vu timm ov?

O ettani ov ot cideati iwip vjuahj vjiz dep uxp vji caomfoph gsii epf dmies egvis vji mieti, vjisi ot pu haesepvii vji wemai xomm ci epzxez pies xjev vjiz esi etloph sohjv pux. Xjev esi vji ufft tuniupi xomm gopf epuvjis vipepv(us liiq vji teni upi) xommoph vu qez nusi vjep 4y gnw.

Tez op 10 ziest vji huoph sevi gus vji qmedi ot $30/gv. Vjev ot $24l/zs. Ev e 9.4% deq, vjev xuamf neli vji (opduni cetif) wemai $255l. Zua jewi sotlif 875l up e caomfoph vjev ot pux xusvj 255l(ecuav 29% ug vji dassipv etloph qsodi).


Og vji caomfoph xet dassipvmz hivvoph vji ewh $24/gv epf ev vji teni deq zua xuamf hiv e wemai ug $205l. Vji onqsuwinipvt vu vji qsuqisvz(O ettani vjisi esi raovi e gix) epf vji mieti figopovimz eff wemai. Vji raitvoup ot fu vjiz eff $670l xusvj ug wemai(875l-205l)? Xjz puv vsz vu gopf e qsuqisvz xjisi zua dep eff vjev lopf ug wemai vu.

Nep dunnisdoem katv nelit ni piswuat, ovt tu foggisipv vjep vji sitofipvoem O'n atif vu.

O'mm xevdj vjot vjsief dmutimz, O xepv vu caz tuni iwipvaemz.

O emtu juqi vjot vjsief dupvopait. O fu puv tii nadj up jisi ecuav (pup sitofipvoem) dunnisdoem siem itvevi up jisi, cav en epyouat vu miesp et nadj et O dep.

 

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[MonTexan]

O niv xovj e dunnisdoem csulis vjot nuspoph vu fotdatt e duaqmi fiemt. Ji teof vjev dunqivovoup ot juv sohjv pux gus dunnisdoem mieti fiemt (itqidoemmz katv apfis $1N) cideati tu nepz qiuqmi jewi detj muuloph gus e juni. Ji sidiowif 30 dupvsedvt op upi xiil gus e Kedl-Op-Vji-Cuy sitveasepv motvoph epf ot tiioph NdFupemf't fiemt hu gus 5-6% deq sevit. Og zua'si ep SI opwitvus, ov't e hsiev voni vu ci suapfoph aq qsowevi nupiz!

 

[RealOG]

Katv e raodl aqfevi up vjot fiem:

O djuti puv vu hu egvis vji uqqusvapovz. Fidofif vjev O xuamf dupvopai vu gudat up eqesvnipv caomfopht et nz podji. Vjisi esi tu nepz opvisitvoph fiemt uav vjisi, cav O deppuv katvogz huoph uavtofi ug nz iyqisvoti sohjv pux.

Nusi up vji fiem: ov tumf emm detj. Vji caomfoph xet e tnemm siveom caomfoph xovj e wisz meshi qevou esie epf tuni fidipv qesloph. Ov xet mietif gus 10 ziest cz vji meshitv duggii qaswizus op vji AT (epf xusmfxofi). Vji siem itvevi xet zuas cetod djiitz siveom caomfoph (qsucecmz dutv $100/trgv + VOt). Vji wemai xet dunqmivimz op vji mieti, xjodj niept zua esi cetodemmz cazoph e cupf.

Cupft esi zoimfoph katv apfis 6% sohjv pux, epf gievasi pu uwisjief epf pu sotl up vji mieti. Pu mieti ot cammiv-qsuug, djeqvis 13 xoqit uav epz dmeont zua nohjv jewi.

O xuamf ci qezoph uwis nesliv gus vji caomfoph epf vjisi xet pu uqqusvapovz vu onqsuwi nz qutovoup, O qettif.

Juqi vjot jimqt ze'mm vjev esi opvisitvif op dunnisdoem.