The Next Perspective in Real Estate ®
The Next Perspective in Real Estate ®
Challenge: Will upgrading this underperforming multifamily property add significant value?
| Customized Business Plan | Results | |
|---|---|---|
| Completely renovate the property | Completed extensive $2 million renovation | |
| Increase rental rates and stabilize cash flow | Increased rents by 40% | |
| Refinance with permanent debt | Refinanced the property with long-term debt and returned 30% of equity to investors | |
| BOTTOM LINE | Currently 100% leased Generating a 20% cash-on-cash return |
Two-building residential complex with 12 units in Chicago
133,000 sq. ft. shopping center in Lincolnshire, Illinois
Challenge: We suspected that the anchor tenant was experiencing difficulty.
| Customized Business Plan | Results | |
|---|---|---|
| Our due diligence suggested that the national retailer occupying the 32,000 sq. ft. anchor space was performing poorly | In our underwriting, we established substantial capital reserves to cover potential re-tenanting of the space | |
| Replacing the tenant was necessary | Executed a 15-year lease with NorthShore, an AA-rated hospital healthcare system | |
| We also amassed sufficient liquidity for deferred maintenance and improved signage | Upgraded landscaping and lighting, repaired parking lot, and installed 3 new pylon signs | |
| BOTTOM LINE | Increase in net operating income (2 years): 30% Net investor equity multiple: 2.4x |
Challenge: Property undermanaged with deferred maintenance issues and month-to-month leases
| Customized Business Plan | Results | |
|---|---|---|
| Upgrade building's physical condition | Major facade renovation ($400,000) and new pylon sign ($50,000) | |
| Improve tenant mix, re-tenant the end-cap space and execute long-term leases | Long term lease with American Mattress resulting in $70,000 additional revenue | |
| Increase rental rates to be in line with market | In 18 months, net operating income increased by 125%, leading to $3.5 million in value creation | |
| BOTTOM LINE | Value increase: 96% (from $3,570,000 to $7,000,000) Net investor IRR: 45.5% | Net investor equity multiple: 1.9x |
Multi-tenant neighborhood center in Harwood Heights, Illinois
Freestanding Building in Deerfield, Illinois
Challenge: Well-located restaurant was operationally and functionally obsolescent.
| Customized Business Plan | Results | |
|---|---|---|
| Convert underutilized property into a well-performing asset through redevelopment and re-tenanting. | Extensive conversations with prospective tenants led to a pivot from a multi-tenant shopping center to a single-tenant two-story redevelopment. | |
| Creatively consider highest and best use; pursue tenants outside of historic retail land use. | Executed a long term lease with Northwestern Memorial Hospital (NWMH). | |
| Sign long-term lease with user and redevelop property. | Worked closely with municipality to obtain necessary municipal approvals and completed redevelopment in 12 months. | |
| BOTTOM LINE | Net Internal Rate of Return (22 months): 57% Net investor equity multiple: 2.2x |
Challenge: Distressed owner required end of year close for undermanaged and undercapitalized property.
| Customized Business Plan | Results | |
|---|---|---|
| Ensure closing by end of year. | Transaction was completed within 17 days of the date an agreement was reached with the seller in an all-cash transaction. | |
| Implement an extensive capital improvement plan. | Replaced façade and made extensive repairs to the roof, parking lot and sidewalks. Installed new pylon sign. | |
| Improve tenant mix, increase rental rates to be in line with market. | Capital improvement led to 100% occupancy and an upgraded tenant mix at market rental rates. | |
| BOTTOM LINE | Significant portion of initial equity returned to investors within 7 months of purchase. Property held long-term, providing investment income to investors for 10 years with limited vacancy and tenant turnover. |
32,000 sf Retail Shopping Center in Oak Lawn, Illinois
Two-Property Parking Garage portfolio in Philadelphia, PA
Challenge: Acquire and operate garages totaling 700 spaces in a requiring divergent hold strategies.
| Customized Business Plan | Results | |
|---|---|---|
| Limit Next investor risk. | Attracted institutional partner with complementary investment criteria and completed acquisition in formal JV partnership arrangement. | |
| Enact business plans specific to each asset. | Sold one of the two properties within 18 months and returned all equity to investors. | |
| Reposition second asset and implement longer term investment strategy. | Re-negotiated parking lease and repositioned the retail component by upgrading the tenant mix. Provided investment income to investors for remainder of the hold term. | |
| BOTTOM LINE | Net Internal Rate of Return (10.5 years): 54% Net investor equity multiple: 3.2x |
Challenge: Two vacancies and a number of near-term lease expirations
| Customized Business Plan | Results | |
|---|---|---|
| Improve the property’s occupancy level | Leased two vacant spaces | |
| Manage lease expirations | Renewed several leases, extending the average remaining weighted lease term to 6 years | |
| BOTTOM LINE | Now 100% leased and generating a 25% cash-on-cash annual yield |
67,000 SF neighborhood center in the Mason Montgomery submarket of Cincinnati, Ohio
64-unit apartment building in Wauwatosa, Wisconsin
Challenge: Although the property had been extensively renovated (prior to our purchase) with a new roof, windows, siding and boiler, as well as a new common area and lobby…the individual units lacked sufficient appeal to support strong rental rates.
| Customized Business Plan | Results | |
|---|---|---|
| Significantly renovate apartments in order to increase rents | Renovated 19 units with new appliances, kitchen cabinets, bathroom vanities and tile, as well as vinyl and carpet flooring | |
| BOTTOM LINE | Achieved an average post-renovation rental increase of 40% |
Challenge: Unfavorable parking lease agreement entered into by previous owner
| Customized Business Plan | Results | |
|---|---|---|
| Convert the operation from a lease to a management agreement, thereby reclaiming profits lost under the lease | During the COVID-19 pandemic, we were able to finalize an early lease termination and begin earning profits as garage manager | |
| Improve the garage’s technology | Installed a Parking Access and Revenue Control System, enabling us to analyze ticket data and customize rates in order to maximize revenue and simultaneously reduce labor costs | |
| BOTTOM LINE | 17% increase in average ticket price (ATP) | During the first three years of ownership, parking revenues more than doubled and NOI increased by 60% |
condominium interest in the 72-space parking garage situated beneath the Metropole condominium complex in Washington, D.C.
50,000 sf warehouse facility in Nashville, Tennessee
Challenge: At the time of acquisition, the property was 100% leased by a publicly traded investment-grade tenant on a short-term lease.
| Customized Business Plan | Results | |
|---|---|---|
| Extend the lease term or replace the tenant | Successfully negotiated a 10-year lease extension and exited the investment right before the market declined in April 2022 | |
| BOTTOM LINE |
Net internal rate of return (4.5 years): 22.4% Net investor equity multiple: 2.3x |
Our real-world experience has shown that our Multi-Solution® investing strategy delivers the level of performance it’s designed to produce… year in, year out, over multiple market cycles.
To discuss investment opportunities, contact a Nextpert® today.
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