Experienced real estate investor and business owner sought a 1st Trust Deed loan on this Free and Clear – no debt – newly constructed 2021 industrial property in a privately gated, 24×7 security guarded complex located in Desert Hot Springs, CA. The purpose of this loan is to complete the interior build-out and subject property improvements. Exit: Loan is Fully Amortizing and the loan balance will be $0 after 36 mos. This is the 4th Cannabis Cultivation Center borrower and his partners own. Three are in Los Angeles (North Hollywood, Panomara City and Awater). Borrower’s partners on this subject property cannabis cultivation center and the 3 other properties are seasoned professional bankers and investors. They are building out this new cannabis cultivation center to replicate the success of the 3 other cannabis cultivation centers currently operating.
The subject is a two-story industrial building with 27,748 SF net rentable space, sitting on a large 43,560 SF lot. Once improvements are complete, the subject property will be used exclusively for cannabis cultivation. The subject is in the process of being extensively built out for high-tech cannabis cultivation use and will offer an entry, 3 restrooms, 4 offices, a break room, 10 flower grow rooms, 4 vegetation rooms, a packing room, and 3 storage/utility rooms, HVAC, an upgraded electrical system, 2 metal roll up doors, a state of the art security system with video monitoring, a gated lot with 2 security entrances. Onsite parking consists of 15 asphalt paved spaces. The building also has an external Mezzanine that allows for the storage of the expansive water tanks to be outside and not take up valuable under-roof square footage. The subject building is configured to house a single user (owner–operator). The Cultivation operating unit signed a 7-year lease that went into effect Sept. 2023 for $62,039 per month. The building and Cannabis permit have been upgraded to accommodate a higher density of 2,000 lights for growing. The land was purchased in early 2019 for approximately $1M the building, engineered steel on concrete slab, was subsequently designed, permitted and constructed for approximately $2.2M.
What we like about this Trust Deed opportunity:
- 15.00% Investor Rate
- Loan to Value Improves over Lifetime of Loan – $0 Balance in 3 years with amortization
- $3.2M Borrower “Skin in Game” into property “As Is” ($1M Purchase / $2.2M “Shell” Building)
- 33.33% LTV / 31.96% Net LTV on recent $4,950,000 “As Is” Appraisal
- $8,320,000 After Completion Value when interior improvements complete; this loan based on “As Is” Value of $4,950,000
- Net Investor Equity on “As Is” Value: $3,300,000
- 7 year lease earning $62,039/Mo, $744,468 annual rent / $18.49 PSF
- 6 months Guaranteed Interest
- 3 months Prepaid Interest
