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stern square partners has been investing in dallas, texas over the past few years. a broker we work closely with sends us an offering memorandum
stern square partners has been investing in dallas, texas over the past few years. a broker we work closely with sends us an offering memorandum for a vacant warehouse in the deep ellum neighborhood of dallas, an upcoming nightlife and restaurant area district similar to nycs meatpacking district. theres no pricing guidance on the property and the Seller is just advising interested buyers to make an offer theres also not a lot of detail on the property itself other than a square footage breakdown and some pictures. the property clearly needs a gut renovation, but we think that it could be a great officeretail conversion given the large amount of development in the area, including a SF office project to be fully occupied by uber.
investment summary:
location: and south nd avenue
occupancy:
building size: sf
vacant land: acres
lot sizes: acres
debt: free and clear
property breakdown:
address
size
category
south nd avenue
sf
warehouse
A south nd avenue
sf
warehouse
south nd avenue
sf
warehouse
south nd avenue
sf
warehouse
south nd avenue
sf
land
after discussing the project internally, we come up with the following assumptions:
estimated closing costs of of the purchase price
hard costs capex required for interior renovations $ psf
landscapingparking renovations $
soft cost estimate for interior renovations $ psf
construction period including permitting months
lease up period months
estimated operating expenses $ psf during construction and lease up $ psf after lease up this includes real estate taxes and property management.
rental rate psf $ PSF
estimated pro forma vacancy rate
annual increases beginning after leaseup; for rents, and for OPEX
leasing commissions are paid once at the beginning of the lease and are of the gross yr annual rent.
you will take out a loan at purchase at LTC Loan to Cost with an interest rate of with years amortization.
you sell the property at the end of five years based on an exit cap of your closing costs are of the purchase price.
questions to answer please provide step to step explanations
ASP decides to raise of the equity required for the project from various high net worth investors. we decide to give these investors a preferred return on their equity and anything beyond that we will take of their profits our promote if we want to give them a IRR net of the promote how much can we offer to buy the property for?
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