To invest, please call Angela Vannucci
at 1-800-606-3232 or CLICK HERE. |
ROSEVILLE ROAD FLEX-INDUSTRIAL BUILDING
George says, “I believe that a very sudden and sharp rise in inflation is probably not in our immediate future, BUT the probability is far, far from zero. The U.S. economy is extremely healthy (ignore that former "CIA expert" trying to sell you newsletters) because our companies and our consumers have greatly reduced their debt. American banks also have an enormous horde of cash to lend. The Fed is itching to raise interest rates. Imagine a scenario where commercial real estate investors suddenly want to borrow as much money as they can in order to lock in today’s low interest rates; i.e., they want to leverage themselves up to their eyeballs. We could see well-located commercial property suddenly shooting up in value. This investment is a hedge, and it is a much-lower-risk real estate investment than you probably have ever made because this is an all-cash purchase."
Blackburne & Sons is pleased to present this new all-cash syndication to purchase a three-unit, 19,636 SF flex-industrial building located in North Highlands, CA. Although this is not a Trust Deed investment, you will still enjoy many of the same benefits. As an investor, you will receive:
- Distributions of net rental income
- Property management reports
The return on this investment will be generated in two ways:
- Net rental income
- Appreciation during the holding period, i.e. three to five years
The subject property is occupied by two nationwide near-credit tenants, and has one vacant suite. The initial income figures provided from sellers report an annual net operating income of $77,098. The vacant suite (5,593 SF) is being marketed for lease at a NNN rate of $0.40/SF. There was an interested party in leasing this space at the time of negotiating the purchase agreement; but, as of this writing, no lease terms have been agreed upon. Prospective investors should assume that these lease negotiations will prove unsuccessful. Assuming this suite is leased at the asking rental rate, the annual net operating income will increase to apprxoimately $108,00.
This flex-industrial property is currently configured for three (3) tenants. The largest tenant, Otis Elevator, is a national near-credit tenant occupying 7,828 SF at $0.63/SF NNN, with 3% annual rent increases. Otis Elevator’s lease was recently renewed, and is not set to expire until November 2020. The second tenant is also a national near-credit tenant, VeriHealth, Inc. Terms of this lease are now month-to-month, as the lease expired February 2015. The sellers have not inked any formal lease terms with this tenant, given the property being listed for sale. Currently, this tenant is paying $0.48/SF NNN for 6,215 SF. As for the vacant suite, Colliers leasing agents walked the space, reviewed the site plan, and believe that the vacant suite could be split into smaller office space(s) with minimal interior improvements. Each suite has access/use of multiple roll-up doors at the rear of the property and ample parking.
Rental rates ($/SF) for flex space are typically higher than for a standard industrial property. Colliers reports the average lease rate for the McClellan/North Highlands area is $0.51/SF NNN, providing potential to increase the net operating income of the subject property not only by leasing out the vacant suite, but to enter into slightly higher lease terms with VeriHealth, than the present month-to-month agreement. Blackburne & Sons views these current and potential vacancies as a slight positive because we are quite bullish on Sacramento area industrial rental rates.
As for the subject property’s potential for appreciation, the subject property is being purchased for $1,400,000 ($71/SF). This particular subject property has been on the market for four (4) months, listed at $1,500,000. The sellers are bay-area investors anxious to sell and move on to new ventures, allowing us to negotiate a purchase price less than the asking price. A full summary appraisal is being ordered and will be completed as part of the due diligence. However, it is anticipated the subject property will appraise for at least, if not more than the purchase price, as a property of similar size in this complex is listed for $78/SF. In addition, according to the Q2, 2015 industrial report from Colliers International, while ”dollar volume and the number of transactions are down year-over-year, the average price per SF increased by 5%”.
Located in Sacramento County, North Highlands has a population of 42,694 and is most known for the presence of McClellan Air Force Base. This base was officially closed in 2001, after being in existence since 1935, by the Base Realignment and Closure mandate from 1995. Today, portions of the base have been converted into a business park and is home to the Aerospace Museum of California.
This flex-industrial building was built in 1989 and constructed as a concrete tilt-up. Each tenant has access to roll-up doors at the rear of the property and ample parking for employees/customers. The property has convenient access to I-80 and Watt Avenue, and borders McClellan Air Force Base. The main entrance to the subject property is on Winona Way, which connects Roseville Road and Watt Avenue. Located within a flex-industrial park (Highlands 80 Commerce Center), the property is subject to CC&Rs that will run with the building; a copy will be provided and reviewed as part of the due diligence.
Nearby buildings across the street from the subject property are all commercial, ranging from flex-space to industrial/office. Neighboring businesses include McClellan Air Force Base, Twin Cities School District Maintenance Facility, a local lumber yard and a recycling center.
Construction for industrial buildings in America has been almost nonexistent since the start of the Great Recession in 2008. New construction has been relatively stagnant in the flex space sub-market, but new construction is very active in industrial sub-markets, mainly in West Sacramento (east of North Highlands). This increase in construction is poised to have a positive impact on overall rental rates, as Colliers anticipates the demand for the newer space will demand higher rates, which will in turn drive up the market average.
There are material risks involved in purchasing this small industrial building, such as: taxes, vacancies, earthquakes, and environmental/economic factors, but these are risk factors that should always be considered during a real estate investment. By purchasing this property with all cash, investors do not have to worry about a mortgage payment. Without a mortgage, the risk of losing the property in foreclosure, assuming we keep the real estate taxes current, becomes almost nonexistent. This is the real value that Blackburne & Sons is adding here - to allow nervous investors to protect themselves against a sudden and a large increase in inflation. All sharp inflation would take would be for banks to get confident enough to start lending aggressively again. American banks certainly have the cash, with over $2.5 trillion in excess reserves sitting at the Federal Reserve.
Blackburne & Sons has been waiting for four years before offering a new syndicated investment. We truly believe this is the right type of property to purchase at this time. The market conditions are in our favor, and if you have confidence in us, we encourage you to invest in this property.
FOOTNOTES:
1. The property information contained in this Property Investment Bulletin is being provided in connection with an offering of membership interest units ("Units") by Equity Preservation Fund, LLC (the "Company") in the membership class designated above (the "Company Class"). Potential investors will purchase membership interests in the Company Class which will, in turn, hold title to the Investment Property. Units are offered only to verified accredited investors pursuant to the Company's Private Placement Memorandum dated May 7, 2015 ("Memorandum"). Potential investors should read the Memorandum and all of the exhibits thereto in their entirety prior to investing.
2. Pro-forma financial information and other information provided in this Property Investment Bulletin contains forward-looking statements within the meaning of federal securities law. Words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “continue,” “predict,” or other similar words, identify forward-looking statements. Forward-looking statements include statements regarding the Manager’s intent, belief or current expectation about, among other things, trends affecting the economy and the market in which the property is located. Although the Manager believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those predicted in the forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” section of this Memorandum. If any of the events described in “Risk Factors” occur, they could have an adverse effect on the Fund’s business, financial condition and results of operations. When considering forward-looking statements, prospective investors should keep these Risk Factors in mind as well as the other cautionary statements in this Memorandum. Prospective investors should not place undue reliance on any forward-looking statement.
To invest, please call Angela Vannucci
at 1-800-606-3232 or CLICK HERE. |
Blackburne & Sons Realty Capital Corporation--For more information, contact Angela Vannucci
4811 Chippendale Drive, Suite 101, Sacramento, CA 95841
Telephone: (916) 338-3232 * Fax: (916) 338-2328
Real Estate Broker -- California Bureau of Real Estate -- License Number 829677
Offering issued with reliance upon exemption provided under section 4(a)(2) of the Securities Act of 1933
and Rule 506(c) of Regulation D.
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