Case Study

Case Study

Summary: 1031 Exchange Executed


DOWNLEG:

Property: 4.6 acre vacant lot

Cash Flow prior to Sale: None

Sale Proceeds: $6.4 million


UPLEG:

Property: Single-tenant, absolute-net-leased grocery building

Cash Flow after Debt Service: $415,000 annually

Purchase Price: $11.83 million

Additional Information:

Annual 1.75% rental increases for an average cash flow of $436,000 over the first 5 years. Investment targeted to provide roughly a 7% average cashflow over the next 5 years. Lease is an absolute NNN – no landlord responsibility creating a lower risk, easy to manage asset. Lease expires February 29, 2040 with two 10-year extension options. Close of escrow was 9/18/19.

Client: Food Processing Owner and Operator with Real Estate Holdings

Service: Advisory Service on a 1031 Exchange

Granite Capital Group (GCG) was engaged to provide 1031 replacement property and asset management advisory services. GCG provided analyses of identified 1031 replacement properties for our client’s consideration and approval based on a detailed investment criteria. The complete assessment included cash flow projections over 3, 5, and 10 year holding periods; capital and loan structuring; prospective renovation plans to enhance the performance of the potential replacement properties; and exit strategies.  

GCG presented more than one hundred viable property options in targeted asset types across the United States with a geographical focus on Denver, Fort Collins, Colorado Springs, Dallas, Seattle, Phoenix, Salt Lake City, and Southern California.  GCG and its client identified a high-quality, long-term, single-tenant, absolute net leased grocery investment. The asset provided significant and stable cash flow while diversifying the client’s growing real estate portfolio for which we had previously arranged two additional 1031 exchanges.