The Tale of the Flying Tigers - Part 2

The Valdosta local who called me and my partner - we’ll call him the Kingfish here - was looking to “flip out” quickly.

The problem, as I quickly identified, was I’d have to buy it without the proper zoning. He’d tied it up at a low price by offering a quick close, and the lifeco’s REO people wanted it off their books by the end of the year. Even if the Kingfish was positive he could get it for us somehow, it wouldn’t be ideal for him to have no skin in the game.

After talking it over with my partner who originally dug this thing up (we’ll call him Chad), we decided the Kingfish seemed entrepreneurial enough, and his basis ($1.3m or $24.43/sf) low enough, for us to pitch him on buying it together.

The reason a low basis mattered was because there was no guarantee we’d get the zoning, regardless of the Kingfish’s confidence, but if we got stuck with just a fairly nice shopping center at $24/sf, instead of a self-storage opportunity, we could figure something out. A 10 cap would be renting the whole thing out at $2.43/sf NNN. I’m no retail expert, but I know people who are, so I got some feedback that it wasn’t a hopeless center.

You know how you should vet your partners carefully, especially before cosigning on a personal payment guaranty, jointly and several? Yeah, me neither.

We called him back and he was down. Chad drove down and met him; I did not, but I trusted Chad. We agreed to go 50-50 on the cash equity required; Chad and I would evenly split our 50, such that it was 50/25/25. And my broke ass, as usual, didn’t have the 25, but I knew a couple friends who would chip in, and I could set up a waterfall with those people regarding distributions.

Re:debt, the Kingfish suggested a bank down there he was friendly with, claiming they could get us to 85% LTC. On a mostly vacant center whose current income wouldn’t cover the debt service. Incredible. Chad and I got our financials in to the little bank and they committed.

I’ll never forget pacing back and forth on my phone at the beach, where I was trying to be present with my family for a few days after Christmas, talking through the closing statement, talking through our hastily drawn-up operating agreement, getting money wired, etc all before New Year’s Eve.

By New Year’s Day Chad and I had our first shopping center. We were all supposed to wait several months to reapply because of a required 12-month “cool-off” period following a failed application, but the Kingfish got it waived and we filled out the ol’ SUP application again.

Back to City Council. Chad and I didn’t even present this time. The Kingfish went up, cool as a cucumber; this was his playground. He painted a picture: we had shown this thing to 40 grocery store tenants and been shot down by all of them (40 was a bit of embellishment but either way, no grocery store was interested; the public never seems to understand this).

Remember that fat dipshit from part 1? He spoke again, of course. This time it seemed like everyone was tired of him. I wasn’t worried about him. In fact, I think the Kingfish addressed, in his speech, the fact that a competing storage operator had made false claims about the business when speaking against us, in an attempt to stop us.

I would’ve thought the Kingfish’s stature in town would sweep this thing right through, but it was still very tense. I remember this awful woman, who was on the council, continuing to question why it should become self-storage, and the conversation practically turned into a shouting match.

But we got it.

We walked out right after the decision, and so did the fat dipshit. I couldn’t resist catching up to him. “Ya know, last year, when we got shot down, the plan was about 300 units. Now we’re going to do 500 units by doing an upstairs” (which was true). That set him off. “I don’t care if ya do 5 THOUSAND units! Good luck gettin your steel delivered on time cuz it ain’t easy!!”

It was time to get this thing built.

[to be continued]