Property Description: ~2.5k Sq. Foot Medical Building
Location: Long Beach, California
Anticipated Closing: June 2023 (update: closed 6/13)
Target annual Return: 20%
Background:
This property is in the process of being acquired. It has several elements that make it an attractive investment. There was a recent $300k rehab for a new facade, high end furnishings and upgraded HVAC and other components.
It is leased to an operator of several mental health facilities in California that is growing quickly, even in a challenging overall economic environment.
This property has almost 18 years left on the lease, with 3% annual increases and a CAP rate north of 6.5% with two additional 5 year options available.
The company uses this facility exclusively for outpatient visits and it is in an affluent part of long beach across from the main park. The facility is necessary as the visits cannot be displaced by telehealth.
It is leased to an operator of several mental health facilities in California that is growing quickly, even in a challenging overall economic environment.
This property has almost 18 years left on the lease, with 3% annual increases and a CAP rate north of 6.5% with two additional 5 year options available.
The company uses this facility exclusively for outpatient visits and it is in an affluent part of long beach across from the main park. The facility is necessary as the visits cannot be displaced by telehealth.
The average income in the 1 mile radius is 50% higher than the average income for the city of Long Beach.
Our purchase price was an all cash offer for 10% less than asking price. The offer was not accepted initially, but due to the original buyer not being able to secure financing, the agent and seller decided to accept our offer contingent on a quick close.
After an inspection and a through review of the lease, the lessee’s financials and the building, we agreed to a quick closing.
This property represents a rare opportunity to take advantage of the high interest rate environment to purchase buildings cheaply. With interest rates anticipated to fall in the next 2-3 years, desired cap rates will fall as well and this represents an enormous opportunity to cash buyers of properties right now. We anticipate this property may generate upwards of 20-25% annual returns.
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