1380 Garnet Retail Center
Urban retail redevelopment opportunity located in the heart of the Pacific Beach submarket of San Diego, CA
- 23.7% Targeted IRR
- 1.53 Targeted Equity Multiple
- 18 Month Targeted Holding Period
- 50% Loan-to-Cost
- Off-market Transaction
- Seven blocks from the Pacific Ocean
- Sponsor providing guaranty to recourse debt
Phoinix Capital Partners
Phoinix Capital Partners (“PCP”) is a privately held San Diego, CA-based real estate investment and development company. Led by two principals with 45 years of combined experience across multiple investment cycles, PCP creates value for its investors through strategic acquisition, repositioning and management of commercial and residential real estate assets.
|Sponsor:||Phoinix Capital Partners|
|Targeted Hold Period:||18 Months|
|Location:||San Diego, CA|
PCP is offering to CrowdStreet investors the opportunity to co-invest in the off-market acquisition of 1380 Garnet Retail Center. 1380 Garnet Retail Center is a 4 suite 4,757 SF Retail Strip Center located in the heart of the Pacific Beach submarket of San Diego, CA. Originally constructed in 1966, and situated just seven blocks from the beach, 1380 Garnet Retail Center presents a rare opportunity to acquire a retail asset in a premiere location of one of San Diego’s finest submarkets and reposition it to capitalize upon current tenant demand. Summary investment attributes include:
- High value-add opportunity through the redevelopment and repositioning of the asset.
- Targeted 18 month holding period intended to immediately capitalize upon value added.
- Outstanding Class A location with a Class A asset post redevelopment
- The asset is currently 100% occupied with a Starbucks located directly across the street.
- PCP Sponsorship leveraged its relationship with Voit Real Estate services (“Voit”), a prominent San Diego-based commercial brokerage firm, to attain an inside look at the opportunity prior to it being availed to the market. Voit has a direct relationship with the Seller.
- The Seller is an out-of-state individual who does not possess the expertise, market knowledge or capital required to reposition the asset.
Suitable investors in 1380 Garnet Retail Center will be attracted to short term equity multiple upside in lieu of cash flow with mitigated downside risk due to the asset’s highly desirable location and strong tenant interest.
|Total Soft Costs||$134,132|
|Phoinix Co-Investment Equity||$100,000|
|Total Sources at Closing||$2,697,634|
|Interest Only Period||2 Years|
|Loan Term (mini-perm)||5|
|Loan to Cost||50.0%|
Summary of Terms
|Equity Investment Amount||$1,350,134|
|Split after Preferred Return to 20% IRR|
|Split after 20% IRR|
|CrowdStreet Investor Targeted IRR 2yr||23.7%|
|CrowdStreet Targeted Investor Equity Multiple||1.53x|
Annual Investor Cash Flow Summary
Hypothetical $50,000 Investment
|Address||1380 Garnet, San Diego CA 92109||1380 Garnet, San Diego CA 92109|
|Number of Tenant Spaces||Four||Four|
|Gross Building Area (SF)||5,000||5,000|
|Foundation Type||Concrete slab on grade||Concrete slab on grade|
|Superstructure||Wood frame and CMU wall with concrete piers||Wood frame and CMU wall with concrete piers|
|Exterior Finishes||Stucco and brick veneer||Steel, plaster, stucco, wood and brick veneer|
|Roof System||Light weight wood truss, felt with gravel||Light weight wood truss, felt with gravel|
|Parking||Concrete. stalls- 8’-6”x18’||Concrete. stalls- 8’-6”x18’|
|HVAC||Roof top package units||Roof top package units|
|Fire and Life / Safety||Non-Sprinklered||Sprinklered|
|Demolition, Site Requirements, Site Services||$41,925|
|Wood & Plastics||$23,000|
|Thermal & Moisture Protection||$34,000|
|Doors & Windows||$26,000|
|Electrical & Low Voltage Systems||$15,000|
|Hard Cost Contingency||$62,758|
|Total Hard Costs||$312,020|
|Architectural & Engineering||$57,100|
|Permits / SDC’s||$10,000|
|Soft Cost Contingency||$11,975|
|Total Soft Costs||$251,483|
|Total Redevelopment Budget||$563,503|
- Acquire 1380 Garnet Retail Center for $2,000,000, a significant discount to replacement cost.
- Place $1,347,500 of recourse debt (50% LTC) on the property. Sponsor providing loan guaranty.
- Reserve $647,409 to fund redevelopment, carrying costs and leasing costs.
- Fully vacate 1380 Garnet Retail center post closing in anticipation of its redevelopment.
- Invest $521,607 to redevelop 1380 Garnet Retail Center during months 1 – 6 of the holding period.
- Attract best-in-class tenants that will be drawn the asset’s location and newly repositioned spaces.
- Fully lease the redeveloped property to one to four tenants by March 2016 at an assumed lease rate of $3.50/SF per month NNN.
- Stabilize 1380 Garnet Retail Center throughout the balance of 2016.
- Sell 1380 Garnet Retail Center in December of 2016 (or refinance it via the sponsor call option) for $3,508,077 that assumes a 5.5% cap rate on forward-looking 2017 NOI of $192,944.
The Pacific Beach submarket in San Diego is bounded by La Jolla to the north, Mission Beach and Mission Bay to the south, Interstate 5 to the east and the Pacific Ocean to the west.
While formerly largely populated by young people, surfers, and college students, because of rising property and rental costs the population is gradually becoming older, more professional, and more affluent. “P.B.,” as it is known as by local residents, is home to one of San Diego’s more developed nightlife scenes, with a great variety of bars, eateries, and clothing stores.
Pacific Beach is one of the main pedestrian centers of San Diego. Garnet Ave., between Ingraham St. and Mission Blvd., is where many bars and restaurants are located.
Curtis is Principal and Co-founder of Phoinix Capital Partners, bringing with him over 21 years of commercial real estate and investment management experience.
Prior to co-founding Phoinix Capital Partners, Curtis was a Senior Vice President with Voit Real Estate Services (“Voit”), specializing in investments and development with an emphasis on multifamily and retail properties. Prior to joining Voit, Curtis served as President of Lockey Capital, focusing on capital procurement and real estate development for commercial projects. During his tenure at Lockey Capital, Curtis raised and managed in excess of $100 million of debt and equity capital. Prior to transitioning to commercial real estate investment and development, Curtis was a financial advisor for both Merrill Lynch and Citigroup with a focus on alternative investments, including real estate-oriented investments/securities.
Curtis received his MBA from the Cox School of Business at Southern Methodist University. He also received his BA in Psychology from SMU. Curtis is currently obtaining his Certified Commercial Investment Manager (CCIM) certification, having phases 1 and 2 completed. He has previously held Series 7, 66, and 63 securities licenses.
Eric is Principal and Co-founder of Phoinix Capital Partners, bringing with him over 27 years of commercial real estate experience. Prior to Cushman & Wakefield, Eric was with Colliers International for 12 years, where he was a consistent top producer.
Prior to co-founding Phoinix Capital Partners, Eric served as Executive Director of Brokerage Services for Cushman & Wakefield of San Diego. While there, his focus was on the leasing and sale of class A commercial real estate in Central San Diego County. During his tenure at Cushman & Wakefield, Eric assisted in repositioning over 1.5 million square feet of commercial property, all of which was located in San Diego County. Eric is a recognized industry expert in representing institutional owners in the marketing, leasing, and repositioning of Class A commercial real estate.
Eric received Bachelor of Applied Science in Business Administration from Arizona State University.