18538 – 18562 U.S. Highway 19, Clearwater, FL, 33764
Property Overview:
US19 is the main arterial road that runs north-south through Pinellas Park and Clearwater (Tampa Bay Area).
This property previously had very good frontage to US19, but a major road construction project to create a flyover to eliminate an intersection (see far right image above) has decreased both its accessibility and visibility from the road, as access is now only possible via an off ramp.
Nonetheless, the position is still desirable but the usage has changed from mainly retail to mainly industrial, and hence the possible rents have fallen too. Furthermore, it may be difficult to fully stabilise the site until the disruption from the construction ends (estimated to be mid 2015).
However, at an acquisition price of $25.89 per square foot – estimated at less than a third of replacement cost – a cheaper rent can be offered and good cash flow still obtained. The $400,000 purchase price equals independent valuation, but is $595,000 less than asking price (which was revised down from an initial $1,795,000).
There are three buildings on site: 8,000 square foot; 7,250 square foot and 16,720 square foot. These are separated into multiple tenant spaces of different sizes.
Property / Financial Information:
Disclaimer: Information provided about forecast annual net cash flow and cash on cash returns are derived from unaudited financial projections. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Responsible Entity. The Responsible Entity cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements.
|
Acquisition date |
30 September 2014 |
|
Contract purchase price |
$400,000 |
|
Original listed price |
$1,795,000 |
|
Discount to listing price |
$595,000 |
|
Independently appraised price |
$400,000 |
|
Estimated insurance replacement cost |
$1,148,350 |
|
Occupancy at purchase date |
27% |
Appraisal date and appraiser |
11 July 2014 |
|
Finance terms |
All cash |
|
Gross Building Area |
16,720 sq ft (1,553 sq mtrs) |
|
Land size |
44,978 sq ft (4,178 sq mtrs) |
|
At purchase estimated net operating income |
-$8,869 |
|
At purchase estimated cap rate |
-1.66% |
|
At purchase estimated cash on cash return |
-1.66% |
Further Notes:
Currency: All numbers are shown in USD. Returns shown have not been translated into Australian dollars as the exchange rate varies. A AUD:USD exchange rate below AUD1:USD1 will increase the percentage return. A AUD:USD exchange rate in excess of AUD1:USD1 will decrease the return.
Management costs: Returns shown above include US management costs, but exclude the management fee charged by the Responsible Entity (1.98% per annum of Gross Assets).
Returns: Returns prior to the property being stabilized are expected to be lower than those forecast above as once off due diligence costs are absorbed, and as less income is received from vacancies as at purchase date. Unless otherwise noted, properties are expected to be stabilized within 12 months of acquisition.
Aerial Picture:
More information on key terms:
| Estimated insurance replacement cost: | The estimated cost to rebuild the property in the event of a total loss. The number is calculated via discussions with a independent insurance broker and considers the age and construction type / quality of the building. |
| Net operating income: | Operating income – operating expenses |
| Capitalization rate: | (Net operating income ÷ Purchase price) × 100 |
| Cash on Cash return: | (Annual cash back ÷ Cash down) × 100 |
| At purchase capitalization rate: | Using unaudited management forecasts, the estimated capitalization rate at purchase date. |
| At purchase cash on cash return: | Using unaudited management forecasts, the estimated cash on cash return at purchase date. |
