A Smattering of Deals I've Been Working On Lately

Wrapped up construction on the Public Storage deal in “LA” (Lower Alabama). Naturally, still no permanent signage (tale as old as time), opened with banners, but we are over 6% full already and I have great faith in this store and in Public Storage. The new Chick-Fil-A a couple doors down is supposed to open this month, which is additional “feelgood” vibes for the corridor.

Next, the shallow bay facility my friend and I took down over the summer is about to go on autopilot. When the DTC manufacturer we were talking to was telling us we would need a power upgrade, I called the electrician school around the block for a referral. They ended up visiting the space - and, surprise, wanting it themselves, more than the DTC company. In fact, I had a 1500 sf partially-connected suite I wanted to market separately, but they want that too, so we’re combining them given what they’re willing to pay.

So, the previous ‘anchor tenant’ signed their termination and the electrician school has signed a new lease, at a high rental rate, starting now. That lease is particularly long for shallow bay: 5 years with two 2-yr options, but my partner likes it. Based on the substantial ‘term’ and the fact that our other tenant is a very good one who will probably stay and allow their rent to be 'brought up to market,' you could argue we are stabilized. Year two of this new tenant's lease will bring us up to an 8.5+ percent yield on cost, with continued growth beyond that. This is quite good in our opinion given the density/infill nature, barriers to entry, and continued growth prospects for Charleston.

Oh - and the brownfield process there is done and was not bad. As a result, I recently pursued another ‘polluted’ warehouse in the Carolinas with a little less fear than I would’ve had in the past.

The vacant storage development site in the mountains of Western North Carolina that we were bidding on via foreclosure auction got too expensive as bidding progressed. The only other bidder was a sitework guy who held a lien on the property, and he apparently wanted the site so that he could sell the dirt for other nearby sitework projects. I might pursue another project in this area, but after he won the auction, we reached out and it sounds like he is not interested in selling.

My undying love for the Hawaiian storage market has led me to help market a workable storage development site in Kona as a favor to the broker. Another broker from Honolulu has now brought me a mainland storage developer client who's interested, so I'm cheerleading them along. I've also been doing similar "light work for karma" in the realm of free advice for other projects, such as a large storage development site in Brooklyn whose owner wants to learn more about the space.

Our storage acquisition + expansion in North Carolina is coming along nicely but slowly. From time to time I would hear that the concrete sub was working on other jobs or telling us that some equipment failed or blaming the weather, so we are a month or two behind, but the delay hasn’t hurt much; we’re <50% drawn on the loan, and the ‘phase i’ units hit 90% occupancy in the meantime. It's been a fun deal so far.

Last but not least, another friend and I have signed a civil engineering agreement to design a several-acre ground-up industrial project that will include some multi-tenant shallow bay as well as one or two single-tenant freestanding "low lot coverage" buildings that will come with a drop yard. Will share more on that as it evolves … thanks for reading.