Commercial Real Estate Financial Proposal

“Commercial Real Estate Financial Proposal”

RES 431

Commercial Real Estate Investment

Commercial Real Estate Financial Proposal

The property is located on one of the most sought after corners in Orange County. This is due to its picturesque location across the street from South Coast Plaza, one of the most successful shopping malls in America, hosting over 24 million visitors annually. Sunflower Plaza also enjoys great street exposure on the corner of Bristol and Sunflower with traffic consisting of over 100,000 cars per day, easy access to the 405 and 55 Freeways, as well as Highway 73. The market in this particular area is experiencing a good investment demand in a stable leasing market.

Description of the property offered as collateral: The property is located at 3929–3941 S Bristol St, Santa Ana, CA 92704. The property is a multi-tenant NNN retail shopping center, anchored by Panera Bread, Vitamin Shoppe, Bank of the West, Jersey Mike’s, and Z Pizza. Sunflower Plaza is strategically located at the intersection of S Bristol St and Sunflower Ave, with traffic counts more than 100,000 cars per day. The property is in an established neighborhood retail location on a high traffic retail corridor surrounded by National Credit Tenants. Located on S Bristol St, a major thoroughfare, and less than a quarter mile from the 405 freeway on/off ramp, Sunflower Plaza is well positioned within a dense and established trade area. Within three miles of the property, there are more than 198,769 people with an average income of $93,932.

The property sits across from South Coast Plaza, one of the top grossing and largest malls in the country and the #1 mall in affluent Orange County. South Coast Plaza is anchored by Bloomingdale’s, Saks, Nordstrom, and Macy’s, and has over 325 stores.

This strip mall has been owned by the same family for over 30 years. It currently has business with leases that date back to March of 2003 and expires no earlier than November 2018. All but two leaseholders are NNN and have a combined total monthly rent of $82,834.

A mortgage of $9,540,000 is offered on a 51% owner-occupied property, representing 90% of the acquisition price of the $10,900,000 of the registered valuation. The Cap Rate is 8.38% with a 3% annual increase.

There are four tenants that currently hold the longest leases are successful franchises. Panera Bread: The company is a leader in the quick- casual restaurant business with about 1,550 bakery-cafes in 40 states and Canada. It’s locations, which operate under Canada. Its locations, which operate under the banners Panera Bread, Saint Louis Bread Co., and Paradise Bakery & Café, offer made-to-order sandwiches using a variety of artisan breads, including Asiago cheese bread, focaccia, and its classic sourdough bread. More than 660 of its locations are company-operated, while the rest are run by franchisees. The company is valued at over $1.82 Billion.

The Vitamin Shoppe: The fast-growing company sells vitamins, supplements, and minerals, as well as herbal, homeopathic, and sports nutrition and wellness products at more than 500 company-owned The Vitamin Shoppe stores located in about 40 US states and the District of Columbia, a catalog, and the websites VitaminShoppe.com and BodyTech.com. The company is valued at over $856.6 Million.

Bank of The West: The bank (which uses a bear as its logo) has about 700 branches in approximately twenty states in the west and Midwest US. It focuses its lending on residential mortgages and consumer loans, to consumers and small to midsized companies, It is a Privately help entity and does not disclose their companies value.

Z Pizza: Z Pizza operates and franchises a chain of more than 70 Z Pizza gourmet pizza parlors in California and about a dozen other states. Chairman Sid Fanarof founded the chain in 1986. The company serves brick oven pizzas made with gourmet toppings.

The three lenders I located to finance this property are Liberty SBF, JP Morgan Chase, and Wells Fargo.

Liberty SBF is a nationwide commercial real estate loan provider that focuses on SBA CDC/504 loans. It is located at 5900 Wilshire Blvd #620, Los Angeles, CA 90036

They exclusively work on commercial real estate (CRE) deals above $1 million and can fund loans up to $14 million. They typically finance the acquisition and/or refinancing of owner-occupied, hospitality, multi-use, and special use projects. Liberty SBF is a great option if you’re looking for the low interest rates of an SBA 504 loan and need to borrow up to 90% of the value of the property. This type of financing can take longer to fund than other providers on the list so it’s important that you don’t need funds within 30 days. The general costs for an SBA 504 loan from Liberty SBF are:

Loan to Value (LTV): Up to 90%

Down Payment: 10 – 20%

Interest Rates: 4 – 6%, variable or fixed

Fees: Up to 3.75%

Closing Costs: $3K processing fee & $10K expense deposit

Term up to 25 years

JP Morgan Chase is a nationwide lender that invests millions of dollars into commercial real estate loans every year. They focus on multifamily, industrial, office, retail, or mixed-use properties and projects, which makes them a good fit for many small business real estate owners and developers. They can fund projects up to $25 million and have competitive rates to most other large real estate investors. The costs of a loan with JP Morgan chase will vary based on what type of project you’re funding and the risk associated with that project. Generally, they’ll fund up to 80% of the value of the property with competitive interest rates similar to SBA loan rates.

The general costs of a bridge loan from JP Morgan Chase are:

Loan to Value (LTV): Up to 80%

Down Payment: 20 – 30%

Interest Rates: 5 – 9%

Fees: 1 – 3%

Closing Costs: 1 – 2%

CHASE does not provide an address, but instead states that an application can be submitted in any local branch and a representative will be in contact. But was able to locate an agent that works for chase that has closed several deals similar to mine Brian Foster Los Angeles Multi-Use Lending (310) 341-1906.

Wells Fargo is located at 2540 Main Street ste r, Irvine, CA 92614, and is routinely one of the largest providers in commercial real estate every year. They look for experienced real estate developers or owners who need to fund large projects. Their maximum financing amount goes up to $500 million, but deals that large are rare. They not only work with individual real estate owners but also with Real Estate Investment Trusts (REITs) and real estate funds looking to raise money for one-off projects.

The costs of a Wells Fargo CRE loan is going to have smaller fee percentages than other loan providers because they focus on larger loan amounts. Their LTV and interest rates are competitive with other large national loan providers.

A CRE loan from Wells Fargo typically has these costs:

Loan to Value (LTV): Up to 80%

Down Payment: 20-30%

Interest Rates: 5 – 10%

Fees: 1 – 3%

Closing Costs: 0.5 – 1%

References:

Betts, R. M., & Ely, S. J. (2013). Basic real estate appraisal: Principles & procedures. Mason, OH: Cengage Learning

de Roos, D. (2008). Commercial real estate investing. Hoboken, NJ: John Wiley & Sons

Geshwender, A. (2010). Real Estate Practice and Principle. South-Western, Cengage Learning.

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