Another 1031 client converting from multifamily to NNN lease.
Need a 9% cash on cash return while not having any management responsibilities. We got you covered.
“We successfully assisted our client that transitioned from a multifamily property into the NNN lease space. The borrower was in a 1031 exchange and opted to invest in a property that had no management responsibilities with a long-term 16-year lease in place. He was able to secure the property at a 7.50% cap rate which allowed him to capture a 8.69% cash on cash return or approximately $140,000 in cash flow. The lending terms we procured provided him with flexible prepayment and a 25-year amortization. The return could have been even higher with more leverage the lender was willing to offer.”
-Chris Miller
Deal Quick Look:
10-year Term
Open prepayment after 3 years
Lender was able to get comfortable on a startup franchisee tenant
25-year Amortization
The Property: The property consists of a 10,000 SF building that operates as “The Learning Experience”. The tenant is a franchisee and the lease is corporate guaranteed by the parent company for 5 years. The building can easily be subdivided into a 4-5 tenant strip center in the future, if desired, creating potential upside for the landlord.
The Challenge: The borrower was purchasing a startup franchisee asset in the midst of a pandemic where the business was affected. The lease commenced shortly after the COVID pandemic began and enrollees stalled until 4 months later. The business was not at breakeven but was slowly progressing. The borrower originally worked with a different mortgage broker that tried 20+ lending institutions with no success. The borrower got in contact with Triple Net Lending who understood the challenges.
The Solution: Chris Miller, Managing Director, placed the debt with a regional banking institution that is part of our NNN lender network. The lender was initially cautious, and we worked diligently to help get them comfortable with the borrower and the business operations of the tenant. Another successful closing and client enjoying strong NNN passive cash flow!
