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In an effort to bring more transparency to CRE, a deal from the trenches:

We bought a half leased medical office building for 55/sf (~1/4th replacement cost) in a prestigious suburb of a declining MSA. Normally we want growth tailwinds but this suburb had been growing and is a
frequent “best places to live” with great schools.

Why’d we buy-
-Able to structure long term sale leaseback from seller (hospital system)
-Huge lot, building had excess land and a great exterior
-Priced as if building was 48k sf when we knew it was 54k sf.

Deal execution-
-Re-parceled land and sold out parcel paying down debt & reducing our basis ~10%
-remodeled lobby to modernize building
-attracted two tenants, one of which full floor user bringing us to 95% occupancy via huge ti package we budgeted in on the front end

-structured leverage such that we had a positive cash flow to carry property
-structured earn-out on the front end such that when we hit lease-up we refid out all our initial equity +10%

We’ll likely sell the deal later this year, but if not the building throws of 250k/yr in cf
@KYRRadio hard to believe this triggered a couple softies out there
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