$20M Shopping Center in the Washington DC MSA - Equity and Debt
I am interested in buying a $20M Shopping Center in the Washington DC MSA and looking for Equity and Debt. My background is Financial Analysis and Commercial Real Estate Modeling. I’ve been doing analysis and modeling for 25 years and this is my first deal as a solo lead or independent entrepreneur after years of working either with M&A buyers to purchase companies or Real Estate Developers.
I’ve been watching them in action, and deeply understand the business and financials, and certain I can manage the deal, yet have not been the lead or lived the reality of operations and deal making. The ups and downs are anguishing…even for the most psychopathic and narcissistic owner operators.
More on the psychology and near dark Triade I’ve witnessed later.
I’ve run the numbers and have a buyer broker on my side to work with the seller broker to purchase this NOI generating property. The idea is to fix it up, and then sell it in 2-3 years for $21.25M.
First question – How do I raise 5% Equity from outside investors/LP’s.
Second question – How do I acquire a loan for 95% from banks/others.
The thing that really scares me is that I saw the financial and real estate pro’s thrash about and around trying to entice equity investors and secure a loan/debt. From UK to USA.
I have a good feel for the whole process, but in all honesty don’t have the experience in looking eye to eye at the seller and money people, though I know this deal can work for all.
Steeling Myself,,,and love the monkeys and bananas and other stuff.
Peace
Robb
I would say you should put together an LP equity offering memo with the structure you described.
95/5 (95% loan and 5% LP of course) sounds like a great deal.
I wish you the best on this endeavor but I think you may lose money here. To get 95% leverage you will need to go to a debt fund for like S + 1200 (may be exaggerating) or so since banks can't / will not touch this. High debt service plus taxes / broker fees does make this investment seem smart.
Quoted s+1100 for mez to infill 60%-70% last week so you're not exaggerating.
BOE - your going to spend additional dollars and sell it for 21.25MM, how can you get a return? And you have faith you can operate it? And you have a backround in modeling? 25 years of experience and you are asking an anonymous forum?
There are so many red flags here.
Anything’s possible with 100% financing
I would immediately take all of the money you are planning on putting into this strategy, open up a vanguard account and throw all of it into VOO. Then network your ass off and get a job where you can work for someone that owns & operates retail. Then revisit this strategy in five years.
Not sure of a typo, but buying for 20mm and selling for 21.25mm in 2-3 years is not a lot. I don't think the garner a lot of investor attention.
This deal is a loser if the numbers you have quoted are accurate. You are looking at 19M + value add in debt costs. The origination on that will be more than your proposed profit. I seriously doubt you have 25 years of modeling experience if you think these numbers make any sense.
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