Each client comes to Prime Properties with a unique set of investment needs. We pride ourselves on a start-to-finish consultative process that allows us to construct an individualized solution.
As an example, a client owned investment properties including a vacant retail building, but one where retail was no longer a viable use. The owners did not want to sell the property. They came to Prime Properties and asked us to find an acceptable use and user for the property, which would give the owner a reasonable return on equity.
Bringing a Complex Real Estate Investment Deal Together
In each transaction, Prime Properties works with every party to understand what is required to make the deal happen. Here, we were able to find a financially stable office/manufacturing user acceptable to the owner; however, the property required significant improvements.
Working with both parties, we proposed the formation of an LLC to implement significant and costly tenant improvements. The types of improvements required by the user were very specialized; in this case costing $1,000,000. Nonetheless, by writing the loan for the tenant improvements for a term of 15 years, and a lease for 15 years, the tenant was able to afford both the monthly loan payment and lease payment.
Creatively Reducing Costs
By securing the building with a $1,000,000 loan and making both the tenant and the owner members of the borrowing LLC, the loan rate was lower because the structure was deemed “owner occupied”. The actual tenant was the LLC, with a sublease to the user. Additionally, the user agreed to be responsible for all debt service and accounting.
Protecting the Client’s Interest
A paramount priority for Prime Properties is protecting their clients’ interests in every transaction. We structured this transaction with both user-provided security agreements, and potent remedies should a default occur.
A Win-Win Deal
Our experience through many real estate investment transactions is that the best ones create a win for all parties involved. Here, our client got the lease he was looking for, and the user got a beautifully upgraded showplace facility at an affordable cost with space for expansion.
Because of the modern facility and increased space, the user was able to update his business model. The resulting growth in the business allowed him to retire the tenant improvement debt five years earlier than scheduled. And, the Prime Properties client is receiving stable net monthly payments providing an excellent return on equity.
We specialize in designing personalized real estate investment strategies; let our creativity work for you.
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