Type: retail/office Value-add
Status: Completed & DISBURSED
Principals of BoxDevCo acquired an interest in an approximately 16,400 SF retail building in Olathe, Kansas in June of 2014, sourced off-market through a personal relationship.
The building had been neglected with tenants complaining of a leaking roof, pavement problems, and other issues. As a result, the tenants were unhappy and lease terms were running short.
Following acquisition the next several months were spent negotiating lease renewals with tenants, replacing a portion of the roof and re-instating a roof warranty, painting the building, repairing asphalt and concrete issues, simplifying the tax parcel, successfully appealing the tax valuation, and other minor clean-up issues.
Following stabilization of the asset, an out-of-town investor with a 1031 requirement approached the ownership group and submitted an offer to purchase the property. Closing occurred July 2015.
This project produced above-market returns due to the value-add nature and creative leverage used in the acquisition.
Cap rate at acquisition: Approximately 10%
Cap rate at disposition: Approximately 7.5%
IRR Before Tax: Approximately 446%
Equity Multiple: Approximately 5.46x (over 13 months)
Note: Past performance of any one deal is not a guaranty of future performance of any specific project. Please evaluate each opportunity independently and invest wisely.