Case Study 3: Long Beach, CA Medical Facility

Property Description: ~2.5k Sq. Foot Medical Building

Location: Long Beach, California

Anticipated Closing: June 2023 (update: closed 6/13)

Target annual Return: 20%


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. 
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. 

About the Author

Ali Chishti

My name is Ali Chishti, and I am a former strategic executive, entrepreneur, investor and practicing and proud Muslim-American. I'm the founder of the Sukoon Halal REIT.
Born and raised in Massachusetts to two PhD scientists, I chose a completely different path.
My professional background includes being a CPA in both Massachusetts and California, as well as being a former Certified Mergers and Acquisitions Advisor.
Beginning my career as an auditor at one of the largest Accounting and Auditing firms in the world, I quickly realized that being an accountant was not my passion and not the right career for me. Leveraging my accounting knowledge into a career in Finance and Corporate Strategy, I quickly became a strategic executive at one of the nation's largest online wholesale printers. At the age of 32, I led the sales process that resulted in a sale to a large PE firm.
I soon grew tired of the transition from growing entrepreneurial company to PE owned, highly leveraged and short-term target focused company. After a brief crisis of conscience, I decided to leave the corporate world for good.
I have focused on Startups and Real Estate investments since 2019. I have been fortunate enough to have been very successful and gained a lot of knowledge along the way, and now I am eager to help others achieve their financial goals in a manner that is halal, socially conscious and sustainable.

I see tremendous opportunities in the Real Estate sector in the coming years, and I would love to join with and benefit others who wish to invest their money without the guilt and moral quandary that exists in much of the Real Estate industry for practicing Muslims. While many of our operating principles may appeal to Muslims, I have met many non-Muslims who have come to understand that the current highly levered approach that most REITs operate in can be a double-edged sword that ultimately may cause more harm than good.

My free time is devoted to my family which includes my parents, wife and two daughters. I enjoy podcasts and audiobooks, staying active in the local Islamic community and am an avid basketball player and Celtics fan, car enthusiast and generally love learning new things.

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