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 appropriate analyses of identified 1031 Replacement Properties for our Client’s consideration and approval based on a detailed investment criteria, including cash flow projections over 3, 5- and 10- year holding periods, exit strategies, capital and loan structuring, and prospective renovations to any Replacement Property in order to enhance performance.
GCG presented well over a hundred viable property options in all targeted asset types across the US, with a geographical focus on Denver, Fort Collins, CO Springs, Dallas, Seattle, Phoenix, Salt Lake City, and Southern California.
GCG along with the client identified a high quality, long-term single tenant absolute net leased grocery investment. The asset should provide significant and stable cash flow while diversifying the clients growing real estate portfolio (one that we enhanced with two earlier 1031 exchanges).
Summary: 1031 Exchange Executed
Property: Owner-occupied industrial with office property
Cash Flow prior to Sale: None
Sale Proceeds: $6.4 million
Property: Single-tenant, absolute net leased grocery building
Cash Flow after Debt Service: $415,000 annually
Purchase Price: $11.83 million
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.