Loan Number: N2410
Loan Amount: $195,000
Minimum Investment: $20,000
Call for availability of smaller participations
Type: First Trust Deed
Yield: 10.0%*

Important Links:
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Suitability Requirements
Offering Circular
Loan Servicing Agreement
Audited Financial Statement for B & S
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PROPERTY

Project: 52ND STREET RETAIL BUILDING
Property Address: 8529 52nd Street SE Snohomish, WA 98290
Description: The subject consists of a 1,606SF single-tenant manufactured commercial building on 2.85 acres, located in Snohomish, WA.

For an aerial view of this property...Click Here!

52ND STREET 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.

“Did you know that every cannabis loan we have ever done has paid as agreed? While past performance is no guarantee of future performance, one can argue that cannabis deals seem to be less risky than other first trust deed/mortgage investments. In addition, this borrower has already made his first payment on his first loan (first payment on 2nd loan not due until April 1, 2018). Big George is a very conservative guy. He didn’t survive for 37 years by offering ill-considered investments. He has carefully studied the risk, and he feels that this deal is far less risky than the vast majority of our first mortgage investments.”

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 much less than on our typical hard money loan."

Blackburne & Sons is pleased to present this new first trust deed secured by a 1,606SF manufactured building on 2.85 acres, located in Snohomish, Washington.

Snohomish is the oldest and best preserved city in Snohomish County. This genuinely historic community is listed on both the Washington State and National Registries of Historic Places. The city's historic district boasts many beautiful Victorian and Arts & Crafts-era homes built around the turn of the century. Also known as the "Antique Capital of the Northwest," Snohomish has a vast selection of antiques with over 350 dealers. Popular attractions include the annual Snohomish Historic Homes Tour, Blackman House Museum, Historic Downtown, hot air balloon rides over the Snohomish River Valley, and many more.

The subject property is situated about 1.5 miles north of the commercial center of the City of Snohomish. The neighborhood is a mix of light industrial, retail and commercial uses with rural residential uses on larger lots in the subject's immediate vicinity. To the south, residential development becomes denser. 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 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, built in 1989, is composed of a raised/perimeter foundation, wood frame wall system, wood beam roof system, vinyl and carpet flooring, and gypsum board interior walls and ceiling. The property was originally configured for residential use, but upon acquiring the property, the borrower renovated it for retail use creating a large open retail area, private office, storage area and restroom. A ramp was added for ADA access and site improvements were added including a 10 space asphalt paved parking lot and updated landscaping. According to the Municipal Code, the subject property's current use and development are legal and conforming. The property is current use is for the retail sale of marijuana and cannabis products.

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 in December 2015 for $240,000. According to the appraiser, the increase in value represented in the “as is” value appears reasonable when considering the increase in property value since the prior transaction and the additional work completed to convert the property from a residential manufactured home to commercial use, painting the exterior and updating landscaping and creating a paved parking area.

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 $1.9mm, and according to the borrower consists of 4 payments due 4/15/18, 6/15/18, 9/15/18, and 1/15/19. The borrower made a $468,000 tax payment in October, and $243,000 from the N2406/Camano Island closing went towards the tax debt. N2409/Suzanne Lane closed February 9, 2018 and the loan proceeds went to complete the 4/15/18 and 6/15/18 tax payments. The proceeds from this new loan are intended to go towards the 9/15/18 payment. The borrower's first payment for N2406/Camano Island that was due February 1, 2018 was made on time.

We engaged a local MAI appraiser who valued the property “as is” at $300,000. We also engaged a local broker who performed an opinion of value, and valued this property at $330,000.

At 65.0% LTV and a 10.0% yield, this appears to be a reasonable speculation. Investing in any first trust deeds 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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