Investor’s IRR: N/A (Investors Bought Out at Par)
Initial Equity: $700,000
Acquisition Price $750,000 (with a $1.5M remodel - September 2000)
Disposition Price: $2.9M (Condo 2003, 2005 & 2007)
Hold Time: Various (Condo Sales)
CAP Rate at Purchase: N/A (Vacant)
CAP Rate at Sale: N/A with Owner / Users &8.75% on Tenanted Investment Units
In September of 2000, 290 Nickel Street was purchased as a joint venture with Verlo Mattress Factory, a Boulder based custom built mattress retailer that was well established in the area. Verlo was looking to expand into the Denver marketplace and needed a more central facility for their main assembly / retail function. . Verlo looked to our expertise in the real estate arena to assist in all aspects of the process as they were not able to appropriately evaluate the opportunities and facilitate the purchase, remodel and required City entitlement process. The joint venture consisted of an initial lease term of 10 years on approximately 50% of the building.
The chosen building was located in a revitalization district in Broomfield, Colorado and was strategically situated across the street from a Target store just off US 36 and Hwy 287. Originally constructed in 1963, the 13,192 square foot building had historically been utilized both as a grocery store and an Ace hardware in later years. In 1980, an additional 2,915 square feet were added to the south side of the Property and in 2002 (during the remodel of the entire building for Verlo), an additional 3,093 square feet was added (thus increasing the total square footage of the project to 19,200 square feet and maximizing the site). The 2002 remodel injected $1.5M into the property, which included a fire suppression system, a new parking lot, refreshed landscaping, a new roof and new HVAC and electrical service for each unit. The project originally required $300,000 of investor equity as the JV partner was able to leverage an SBA loan to borrow the remaining funds. An additional $400,000 of equity was added to the investment during the hold period. Additionally, we were successful in negotiating a sales tax rebate with the City (structured as a shared percentage of all dollars generated as sales revenue with a minimum refund of $250,000) to assist in upgrading the exterior look of both the building and surrounding landscaping.