What is the highest return project you've ever seen?
I've seen last week a sub-1M$ development project with 200-300% on equity capital from start to end within a year (construction period - 3 months).
Couldn't believe it.
I've seen some distressed suburban office deals with returns in that range. Basically a quick renovation, lease up and pitch it to some institutional pigeon in 2-3 yrs.
I've seen development projects with infinite returns, due to subscription financing and cash flow from pre-sales.
Came here to say this too. Also working to dispose of a deal right now that will be a 200%+ IRR.
Could you elaborate on "subscription financing and cash flow from pre-sales" and what exactly they are?
Subscription Financing is only available to funds. Say the fund raises $500 million in capital commitments. The fund then gets a Subscription Line that allows them to borrow up to, say, 50% of the uncalled capital.
Cash flow from pre-sales would typically be for a condo deal. You begin building a 100-unit condo building. Before completion of the building you begin selling units. Proceeds from sales before completion of the building would be pre-sales.
Putting that together, you can do a condo deal that is financed 40% from equity (but is really drawn from the subscription line) and 60% from project-secured debt so there is really no equity in the deal.
2x equity multiple is pretty common in small spec construction projects. I'm shooting for 3x on a small 700k deal BC I stole the land
Mind elaborating on how you stole the land? Was it a foreclosure, broker deal, off market, etc? I'm trying to figure out how to get good deals on land but it's proving to be difficult in NYC.
Small assemblage, part tax foreclosure and rest off-market, sum of parts worth much more than parcels individually
No such thing as a good deal on land in NYC. Pay to play.
Buy oilfield for pennies. Put in secondary/tertiary recovery, sell for millions.
Then again, without deep engineering knowledge you stand no chance.
My firm capitalized a MF development where the deal hit a 3x and the GP hit a 10x (post-promote) in 3 years.
Buying a large one story industrial property in Hudson Yards before the rezoning. Not sure what the IRR was on it but I do know the real estate is now worth more than the operating business they bought it for.
There was a Chase Bank that sold in my area in 2013 or 2014.
-$950,000 land acquisition costs +/- (no idea what their other costs were) -20-year ground lease to Chase Bank that got signed that same year I believe -30+ offers within 1 week of marketing -Sold above list price for $4,560,000 sub 4% cap rate
Not too shabby
Oh I also know of these guys who bought a Ralphs from this old widow in like 1997 because one of the partners owned a restaurant in the shop space of the center. $2M... They put down 10% and she carried paper.
Ralphs' lease expired like 7 or 8 years ago and they wanted sign a new ground lease for the entire parcel to build a new store. They paid $700,000 NNN in rent in year 1.....Last year they were at $770,000.
Also not a bad deal for some mom and pop investors. They're not overly sophisticated or anything.
Oh and then there's this: http://www.wallstreetoasis.com/forums/thor-sells-693-fifth-avenue-for-5…
Joe Sitt sold the Valentino property on 5th avenue for $525M after buying it for $142.5M in 2010
working on a small deal(sub 500k) where we a projecting with Private debt a 5X in less than a year in a core market. Its the best deal I have ever seen.
Made a justification for a capital investment with a 1600% IRR this year. Some people had rented some equipment at insanely bad terms at work and i did a DCF of buying it out. I'm guessing senior management was like "what the fuck??"
alternatively, this thread could have been titled "deal porn"
Dabhol Power Company
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