Big Transaction for California Investor
One of the indicators that a commercial real estate team is providing the expert assistance investors are looking for is repeat business. That was the case in an engagement with a California woman looking for a new investment property near Fort Wayne, Indiana.
Having worked with Sturges Property Group on a successful property acquisition a few years prior, she was eager to leverage our comprehensive services again to streamline this purchase. And she was thrilled when we found a great warehouse property portfolio for her on the first day it was listed.
Delivering Unparalleled Underwriting & Brokerage Services
As a purchaser of commercial real estate investments, it’s important to have a representative who is well-connected and established within the market. In the case of this purchase, Sturges had existing relationships with the buyer, seller, and most of the tenants, which built a sense of trust among all parties.
Beyond business connections that have been established over the previous years, Sturges offers underwriting services for all of our buyers that go above and beyond those of other firms. These services include:
- Conducting a thorough review of all leases to determine the strength of leases and to clearly understand tenant and landlord obligations.
- Examining the creditworthiness of tenants.
- Evaluating the condition of the buildings and creating a capital improvement plan based on inspections of the assets.
- Producing a 10-year proforma that lays out every possible scenario over the next decade.
In this case, the buyer was able to submit all of this information to their lender to expedite their financing.
Providing the Full Spectrum of Commercial Real Estate Services
As a property acquisition moves forward, our team provides additional services. For example, we can gather information on, or assist with, obtaining new insurance coverage, opening bank accounts, coordinating environmental inspections, arranging for surveys, and helping with title work.
These kinds of services can take a significant burden off the purchaser. For our buyer, the acquisition of this four-building portfolio began in December and the closing took place in early March. In the commercial real estate world, that is a FAST transaction—and one that enabled her to invest capital in order to meet a deadline.
In this transaction, the property showed tremendous potential and time was “of the essence” with such a fresh listing. So, the buyer chartered a flight and traveled to Fort Wayne to tour the four buildings that are part of the warehouse portfolio, talk with us about due diligence tasks, and discuss our property management services if she made the purchase.
Identifying the “Perfect” Property Is Just the Beginning
It’s common for people who have found a property that meets their criteria to say, “It’s perfect!” When we’re working with a buyer and decide to show them a particular property, we hope that’s true, too. However, even after an offer is made on an investment property, there’s still much work for our team to do.
This includes:
- Obtaining a general ledger from the owner to check on the payment of bills, etc.
- Obtaining a list of contractors that have worked on the property.
- Meeting and establishing relationships with existing tenants.
- Studying current tenant leases.
- Ensuring tenants understand their contractual responsibilities.
It’s important to know how the property is operated. For instance, if tenants pay for common area maintenance costs (CAMs), there are things like insurance, taxes, and fees to consider.
Of course, in some cases, it can be hard to obtain that information and/or decipher it. That’s particularly true with owner-managed properties. Fortunately, our team of seasoned commercial real estate professionals has well-honed “detective” skills. They know what to look for, where to look, what questions to ask, and how to interpret the data they uncover.
Understanding a Commercial Real Estate Investor’s Goals & Motivations Is Essential
Every commercial real estate investor—like every commercial real estate property—is unique. Simply showing someone properties that check the box on a vague set of high-level criteria isn’t especially helpful. In fact, it’s an indicator that the agent isn’t fully engaged or willing to put in the work to ensure a property meets the buyer’s needs.
The best outcomes are driven by a genuine interest in what motivates a buyer coupled with a concern for finding a property that doesn’t just achieve their goals but ideally exceeds their expectations.
In the case of our California investor, we learned in our first engagement with her that she had a positive association with multi-tenant warehouse space that went back to her childhood. After emigrating from Argentina to Los Angeles, her father would spend weekends welding sailboats and selling them at a local farmer’s market.
Soon, his passion became his full-time vocation, and eventually, he decided to lease an industrial space where he could create his products. Gradually, he built a business that employed 20 people. After years of running his successful company, he sold it in order to leave an inheritance for his loving family.
Our buyer's first property acquisition through Sturges was the same type of multi-tenant industrial space, though not in L.A. She found our company while searching online for industrial building investment opportunities. While she didn’t know a great deal about the Midwest, she appreciated our extensive knowledge of the Indiana real estate market.
She also recognized the advantage of working with a company like ours that offers both commercial real estate services and commercial property management. Who better to understand the value of commercial property than a company that has decades of experience in commercial brokerage and property management?
With this first transaction in particular, we were able to provide the best “intel,” having managed the 38,000 SF building for more than two decades.
Ultimately, she purchased the well-maintained, five-tenant property that was 95% leased and listed at a 9.29% cap-rate. Plus, it’s located just two miles from downtown Fort Wayne in a strong industrial warehouse neighborhood.
In short, working closely with the buyer to get an in-depth understanding of her motivation and criteria led to a great outcome in her first transaction with us, and set the stage for a productive collaboration on her subsequent purchase.
High Praise From an Investor With High Standards
The financial results from an investment are a critical objective measure of success, of course. However, a client’s subjective opinion of the process is just as important to us.
In this case, our buyer provided a glowing review, saying:
It was a pleasure working with Brad and his team. The transaction went smoothly and I was very pleased with the outcome. Looking forward to their professional management of my new acquisition.
Specifically, she explained to us that we met her expectations by providing timely responses to her questions, acting quickly once a property was identified, having extensive market insights and building maintenance knowledge, and being open and honest in all of our communications with her.
And we don’t take this type of praise for granted. Commercial property investors are intelligent people with very specific objectives and very high standards. When they let us know that they’re pleased with the services we’ve provided, we take pride in those comments and use them as motivation to achieve the same type of successful outcome for our next client.
