Long-time real estate investor and business owner was seeking a business purpose, cash-out 3rd TD on this Industrial Flex property in Carlsbad, CA. Funds from our loan were used to help relocate his sports flooring and locker manufacturing business to Ensenada, Mexico where he is building a 25,000 SF factory. For the past 20 years he has provided LA Fitness and other franchises with flooring and he is now beginning to focus on lockers due to the higher margins and demand.
The subject property was a 100% net-leased single-story building with 3 tenants measuring 16,759 SF and situated on a 1.33-acre lot. Suite 101 was 4,380 SF with 85% improved lab/office use and 15% warehouse. Space featured 5 private offices, 2 restrooms rental rate of $2.01 PSF NNN (lease expires 7-31-2023). Suite 101 was 3,593 SF and included 70% office/30% warehouse mix with 2 restrooms and rental rate of $1.75 PSF NNN (lease expires 7-31-2023). Suite 102 was a creative office with 90% office/10% warehouse mix. Space featured several window offices and 2 restrooms with showers. Current rental rate was $1.44 PSF NNN (lease expires 10-31-2020). Each lease had 3% annual increases. Total monthly rental income was $27,755 with $1.66 PSF NNN avg.
This loan was a 60.00% CLTV on the appraised value of $5.5M. Loan structure featured 4 months’ Guaranteed Interest, 3 months’ Prepaid Interest and 10.50% annualized return. Minimum investment was $30,000 or 10%.