Loan Number: N2406
Loan Amount: $264,000
Minimum Investment: $20,000
Call for availability of smaller participations
Type: First Trust Deed
Yield: 9.0%*

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PROPERTY

Project: CAMANO ISLAND RETAIL BUILDING
Property Address: 1137 SR 532 Camano Island, WA 98282
Description: The subject property consists of a 2,020SF freestanding commercial building on 1.14 acres, located in Camano Island, WA.

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CAMANO ISLAND RETAIL BUILDING

THE LOAN OFFERED HEREBY IS A CANNABIS LOAN THAT WILL BE SECURED BY A PROPERTY UTILIZED TO GROW, MANUFACTURE, PROCESS, DISTRIBUTE OR DISPENSE CANNABIS OR CANNABIS RELATED PRODUCTS. THIS LOAN INVOLVES SIGNIFICANT ADDITIONAL RISKS NOT ATTRIBUTABLE TO LOANS UNRELATED TO THE CANNABIS INDUSTRY AND SUCH LOANS ARE NOT SUITABLE FOR ALL INVESTORS. POTENTIAL PURCHASERS OF FRACTIONAL INTERESTS IN THIS LOAN MUST REVIEW AND UNDERSTAND THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR ENTITLED "ADDITIONAL RISKS AND CONSIDERATIONS OF CANNABIS RELATED LOANS" PRIOR TO INVESTING. PURCHASERS OF INTERESTS IN THIS LOAN SHOULD ALSO CONSULT THEIR OWN LEGAL COUNSEL AND INVESTMENT ADVISORS WITH RESPECT TO THESE RISKS TO DETERMINE IF AN INVESTMENT IN THIS LOAN IS APPROPRIATE FOR THEIR PARTICULAR RISK TOLERANCE PROFILE AND FINANCIAL SITUATION.

George says, "In order for a borrower to be willing to pay hard money rates, there has to be a major flaw in the deal. A very good argument can be made that, with more and more states legalizing pot, the risk of a Federal crackdown is now far less than the risk of a garden-variety borrower payment default. On this particular deal, we view the risk of a payment default to be much less than on our typical hard money loan."

Blackburne & Sons is pleased to present this new first trust deed secured by 2,020SF commercial building on 1.14 acres, located in Camano Island, Island County, Washington.

Camano Island is a small island located in the northeastern section of Puget Sound, with a census population of approximately 15,500 in December 2016. The island varies in width from just over five miles (at the northern end) to about one-half mile (near the southern tip) and is approximately eleven miles long. Camano Island is approximately an hour north of Seattle and an hour south of Canada. Today, Camano Island supports a considerable number of retirement and recreation communities, but is increasingly becoming a bedroom community for professionals who commute south to jobs in Everett, Seattle, and even Tacoma. Popular activities both locals and tourists enjoy are visiting marinas, kayaking, whale watching, zip-lining, biking, and many more.

Island County is located in the northwest of the state of Washington and consists entirely of islands. The two large islands that make up the county are Whidbey and Camano Island, as well as seven smaller islands. The county has a total area of 517 square miles, of which 208 square miles is land and 309 square miles of water, making it the second smallest county in the state of Washington. The islands are spectacularly scenic and the nearby archipelago is a popular tourism destination. Tourists arrive via ferry, private boat and float plane throughout the year. The county has in turn attracted many retirees. The Island County is regularly included on lists of America’s most desirable places to live. Today, tourism-related industries and retirement communities form the economic base of the Island County economy.

The subject property has good access and visibility given its location along the north side of State Highway 532, the main highway connecting Camano Island to Stanwood and Interstate 5 to the east. The neighborhood is a mix of retail, commercial and agricultural uses with supporting residential uses located on larger lots nearby on secondary streets. The commercial center of Camano Island is located approximately three miles southwest of this area. The streets are paved with asphalt, and all utilities and city services are available to the neighborhood. The properties in the area generally reflect average to good levels of maintenance and condition and the market appeal and acceptance of the properties is average. The neighborhood is in the stable stage of its life cycle.

The subject property is improved with a freestanding, one-story commercial building, totaling 2,020 square feet of gross building area and currently owner-occupied and operated as a retail marijuana sales facility. According to the Municipal Code, the subject property's current use and development are legal and conforming. The interior of the building consists of a large open retail sales area with a private office, storage and employee restroom on the north side of the building. The property was originally built in 1970 and upon acquiring the property in 2014, the borrower renovated the interior of the space for retail use. The property has vinyl flooring in the sales area and restroom, with carpet in the office area and sealed concrete in the storage area.

Our borrower, a married man, has a mid-credit score of 718 and a reported net worth of $24,383,278. He reported personal income of $4,685,201 in 2016, and $6,650,237 in 2015. Title is held by a single asset LLC whose income is reported under the borrower’s personal tax returns.

The borrower purchased the subject property for $430,000 in June 2014. Per the appraiser, this is generally consistent with the concluded “as is” value. While property values have generally increased since the prior date of sale, it is noted that the subject property was purchased in an off-market transaction and the borrower may have paid a slight premium due to the limited inventory of commercial buildings in the area and the required distances from certain uses required for the subject's marijuana retail sales use.

Our borrower will be using our loan to pull cash out of his 5 commercial properties to pay his personal income taxes that were due October 15, 2017. This tax payment is estimated to be in excess of $1,900,000. The borrower made a $400,000 payment in October and is on a payment plan for the remaining balance. Our loans will be used to pay off this balance in full.

We engaged a local MAI appraiser who valued the property “as is” at $440,000. We also engaged a local broker who performed an opinion of value, and valued this property at $355,000.

At 60.0% LTV and a 9.0% yield, this appears to be a reasonable speculation. Investing in any first mortgages involves substantial risk. A large and prolonged decline in real estate values is possible. Be sure to read the Risk Factors section of the Offering Circular carefully before investing. Foreclosed commercial properties almost always need to be renovated before they can be leased or sold, so be sure to maintain some liquidity.

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 -- NMLS Number 103430
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
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