Property Type: 5k sq. ft Office Building
Location: Upland, California
Holding Period: ~18 months
Total Return: ~32%
Annualized Return: ~20.4%
Background:
This property was acquired in October of 2018. It had several elements that made it an attractive investment. First of all, it was in fantastic shape with a recent $600k rehab for a new facade, high end furnishings and upgraded HVAC and other components.
It was leased to an operator of several charter schools in the San Bernardino area with a long-term lease. The property was a modified triple net lease with 5 years remaining upon inception.
In November of 2019, the tenant made a strategic decision to close one of the schools and this building was unneeded. We negotiated an early lease termination of a year’s rent upfront and a forfeited security deposit.
After a careful analysis of the market at the time, we decided the best course of action was to sell the building rather than attempt to find a new tenant. We reached out to a local agent who had recently sold an owner- occupied building and asked them if they had any backup buyers for the property that recently sold. We asked if they would be interested in looking at our property.
It was leased to an operator of several charter schools in the San Bernardino area with a long-term lease. The property was a modified triple net lease with 5 years remaining upon inception.
In November of 2019, the tenant made a strategic decision to close one of the schools and this building was unneeded. We negotiated an early lease termination of a year’s rent upfront and a forfeited security deposit.
After a careful analysis of the market at the time, we decided the best course of action was to sell the building rather than attempt to find a new tenant. We reached out to a local agent who had recently sold an owner- occupied building and asked them if they had any backup buyers for the property that recently sold. We asked if they would be interested in looking at our property.
This agent was very proactive and had multiple bids on the property that he had just sold. As a result, he was able to show them this property that was currently off market and we were able to secure a deal with a regional law firm very quickly. After a few hiccups due to the beginning of the COVID19 pandemic, we were able to sell the property in May of 2020.
The property sold for 25% over what we had purchased it for less than 18 months prior, and even after taking all expenses into consideration, provided us a total return of almost 32% or 20% per year.
The property sold for 25% over what we had purchased it for less than 18 months prior, and even after taking all expenses into consideration, provided us a total return of almost 32% or 20% per year.
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