Beck-Reit is BUYING! Send Us Your Listings!
Beck-Reit is BUYING!
New 1031 Requirement Up to $4M
See Below for our purchase requirements and please send information on all potential listings to Ruth@beckreit.com
Last Fall Beck-Reit purchased 12955 Wright Rd, a brand new 20,000sqft warehouse with a 1,500sqft office space located in Creedmoor, TX - a Southeast submarket of Austin.
The price was right and we anticipated persistent supply chain disruptions into 2022. Despite being a vacant property, we were confident we could lease the space via Beck-Reit Commercial Real Estate given industrial market conditions at the time.
We weren’t wrong. Within a month after closing, we executed a short-term 6-month lease at market-rate rent to a home spa/hot tub repair company in order to buy us time through the end of ‘21 while we continued soliciting a 3-5 year NNN tenant. By the end of our short-term lease, we had negotiated a 3-year NNN contract with our current tenant at market rate with 3% annual bumps. It was time to sell.
Our work at Beck-Reit Commercial keeps our finger on the pulse of the greater Austin commercial market. We wanted to sell this property fast, so we priced it accordingly. Take a look for yourself, how many brand new buildings are on the market in the greater Austin area with strong tenants and long-term NNN leases? Not many. And at a 6% cap rate? None. We went on the market at a 6.2% cap rate, or $3.5M. 12955 Wright Rd was under contract in a week for $100K above asking.
With our feasibility period expired, we’ve got a new challenge… finding a 1031 Exchange for our $2M gain.
We took a risk on our Wright Road warehouse play by buying a vacant property. Luckily for us, our market forecasting and leasing experience paid off BIG.
Now, it’s time to #protectthegain by placing our sale proceeds into a SAFE INVESTMENT.
Luckily, this isn’t our first rodeo - and we know exactly what we’re looking for. In December of 2020 and February of 2021, we were in similar situations. Having sold two separate redevelopment projects in Austin, we were looking to place sale proceeds into safe long-term hold investments.
Our Purchase Criteria were as follows:
Strong Tenant (Community-Oriented, Recession-Proof Industry, Good Financials)
Long Term Leases (5-20 years)
6% cap rate
New Construction (Newer than 2015, unless the building is SUPER simple - block construction, for example)
Austin - San Antonio Corridor, Houston, Dallas Location
Please Send any and all potential properties fitting this requirement to ruth@beckreit.com
And See below for an overview of those two previous 1031 exchanges and our associated due diligence investment analysis
4403 W. Commerce - San Antonio, TX
We acquired 4403 W Commerce in December of 2020 after selling 2707 Rogge Lane in Austin. The Rogge property was an East Side shopping center near the Mueller that required a gut renovation. We had it leased up and were working through our redevelopment plans when Austin’s growth out-paced us and a bigger fish came with an offer we couldn’t refuse.
We felt like we could sell high in the Austin market and move our gains into a safe and stable NNN investment elsewhere.
4403 W. COMMERCE - Boost mobile
2,489 Sqft
Built in 1992, simple block construction building
NNN 5-Year Lease w/ 5-Year Option to Extend
6.4% Cap Rate
Traffic Count 20,454 VPD
SAVY INVESTING: LOOKING FOR SITE & SITUATION
4403 W. Commerce caught our eye because of its simple, sturdy block construction, parking lot, NNN and personally guaranteed lease, and 6%+ cap rate.
We also took into account the property’s situation within West San Antonio. The property is in a good position for long-term success. It’s located close to St. Mary’s University and established neighborhood community. It provides an essential service that fits the budget of surrounding residents. It’s within close proximity to similar essential and community-focused businesses along a major thoroughfare.
Once we determined the building was structurally sound and the existing tenant financially capable, it was on to closing. We’ll be holding on to this building for the foreseeable future and expect minimal management efforts.
8808 BARKER CYPRESS ROAD
4751 Sqft
Steel-Frame construction, built in 2017
37 Parking Spaces
Barker Cypress Rd Frontage (142ft)
NNN 10-Year Lease w/ 10-Year Option to Extend
Personally Guaranteed Lease
6% Cap Rate
Here are just a few of the reasons this Taco Casa caught our attention. We drove down to Houston to inspect the building personally, and found it was solid construction with minimal annual repair expenses to be expected. We reviewed the tenant’s lease and financials and felt secure in their ability to perform over the course of their lease. Next, it was on to evaluating the surrounding area.
37 Parking Spaces on a nearly full acre lot.
SAVY INVESTING: LOOKING FOR SITE & SITUATION
When evaluating 8808 Barker Cypress Rd, we liked the quality and age (2017) of construction, the large parking lot, the cap-rate and the personal guarantee. Still, when considering an investment with a (potentially) 20-year lifespan, we felt we had to look beyond the property lines to feel confident enough to pull the trigger.
Lucky for us, the suburbs of Houston are booming. This Taco Casa is located near the intersection of three master-planned communities, a large community college and sports stadium. It’s also adjacent to several long-term leased community-centered businesses. The surrounding business mix - targeted to support a growing population of college students and young families - gave us confidence that our tenant would thrive despite seasonal economic changes and/or pandemic-related economic turbulence.
