This investment is a 3.24-acre heavy industrial zoned parcel with a +/-34,679 SF composed of a parts showroom and service bay for heavy-duty trucks as well as a showroom and distribution warehouse for a parts supplier for the refuse industry.
Properties of this size and zoning with additional yard space are highly sought after. The demand for these types of properties greatly exceeds available supply in the Phoenix metro, and there is almost no new inventory being constructed, especially within this submarket.
The supply/demand imbalance coupled with the significantly below market rents make this property a tremendous investment opportunity for us and our partners.
University Drive
1626 & 1646 E University Dr. Phoenix, AZ | Industrial
We are purchasing this property with strong income in place from the existing tenants, TruckPro and Wastebuilt. TruckPro’s lease is a NNN lease of approximately 25,000 SF of structure and a majority of the yard space and currently provides $172,621.20 annually. This equates to an approximate $.58/SF/month NNN lease rate. Wastebuilt’s lease is a NNN lease of approximately 10,000 SF of structure and some parking space and currently provides $74,520.00 annually. This equates to an approximate $.62/SF/month NNN lease rate. The combined lease rate is approximately $.59/SF/month NNN. We are currently seeing lease comps at market rents for smaller low coverage buildings such as this one trading in excess of $1/SF/month
TruckPro’s lease currently provides them one (5) year option to renew their leases at market rate. As part of their lease option, the landlord dictates what market rents are. If the tenant disagrees, it is a very difficult process for the tenant to dispute the lease rate the landlord proposes. TruckPro’s lease expires in approximately two years, at which point they can exercise their option to renew their lease. Wastebuilt’s lease ends in just over two years, at which time we will bring them to market rates as well.
We anticipate both tenants remaining at the property with the rental increases, as the tenants know they will have an extremely difficult time finding a similar product to lease at the lease rates we are proposing due to limited inventory in the Phoenix market. If either tenant decides not to renew, we have budgeted money for property improvements as well as a leasing fee for our broker who would assist us in locating a new tenant for the property in this situation. We know we will be able to release the property quickly to a new tenant for significantly higher rents due to the current lack of supply for this product type.
We see the opportunity to reposition the property by increasing both of the existing tenant’s lease rates upon exercising their options and then exit for a significant profit. We have modeled the returns we are achieving by renewing both leases at $.85/SF/month, which is a conservative blended lease rate for this property type. As mentioned previously, we are seeing lease rates for this product type in excess of$1.00/SF/month.
University Drive
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
We conservatively underwrite all of our projects in an attempt to under promise and overdeliver. We also compare our conservative underwriting to three different scenarios. The first scenario, the 20-Year Avg. Growth model, incorporates the average annual rent growth and cap rate compression that has occurred over the last 20 years in Metro Phoenix for each year of the investment period.
The second scenario, the Last Year Growth model, incorporates the average annual rent growth and cap rate compression that has occurred over the last year in Metro Phoenix for each year of the investment period. The third and final scenario, the Great Recession model, demonstrates how the asset would have performed if theGreat Recession started the day after we closed and continued its downward trend during the investment period, which includes cap rate expansion, decrease in market rental rates, and 12 months of vacancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy. Various versions have evolved over the years.
Founded in 1958, TruckPro is a heavy-duty truck and trailer retail parts store and service repair provider. TruckPro has more than 145 locations throughout the U.S. and Canada and is growing.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry Lorem Ipsum has been the industry’s standard dummy text ever since.
Hanson Capital Group is a team of commercial real estate experts with a combined 50+ years of experience in the industry, offering a unique approach to investing in commercial real estate. We manage over $50mm in equity and oversee over $125mm in assets.We specialize in value-add multifamily, industrial investment product, and industrial and multifamily development, opportunistically shifting our focus from one specialty to another in order to capitalize on market inefficiencies as they present themselves. This diversified approach to investing provides the flexibility necessary to navigate complex and evolving market conditions and market cycles and affords us with the ability to stay several steps ahead of trends and potential headwinds.
We are on the path to building a $100mm+ portfolio of industrial investment product over the next twelve (12) to eighteen (18) months. We have developed a proprietary system for sourcing and securing off-market industrial investment product (including establishing programmatic broker agreements to ensure that we are the broker’s first call on deals that meet our investment criteria) which provides unprecedented access to deal flow. Our primary focus is on the Phoenix and Dallas-Fort Worth metropolitan statistical areas which have been building momentum over the last couple of years and are on the precipice of becoming the shining stars in industrial real estate.
In 2021, we launched Hanson Capital Industrial Fund I, which is a $100M private equity fund dedicated exclusively to acquiring industrial investment product and developing “Class A” industrial product. Our affiliate, Hanson Capital GP1, LLC acts as the general partner and has full discretionary authority to deploy the capital raised into the fund as opportunities present themselves, which allows the fund to act quickly and providing assurance of closing, which further enhances our ability to secure the very best opportunities.
In addition, as an affiliate of Hanson Capital, LLC, a state licensed bank that originates hard money and bridge loans and which manages in excess of $25mm at any given time, we are uniquely prepared to work with our lending partners to secure the very best terms and to make their review and underwriting process as easy as possible.
Lastly, our organization’s core principals are to always remain relationship minded and not transactional, and always do what we say we will do. With this focus, we look to develop strategic alliances that produce mutually beneficial results for all involved for years to come
University Drive
1626 & 1646 E University Dr. Phoenix, AZ | Industrial
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy. Various versions have evolved over the years, sometimes by accident, sometimes on purpose (injected humour and the like).
Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a Latin professor at Hampden-Sydney College in Virginia, looked up one of the more obscure Latin words, consectetur, from a Lorem Ipsum passage, and going through the cites of the word in classical literature, discovered the undoubtable source. Lorem Ipsum comes from sections 1.10.32 and 1.10.33 of “de Finibus Bonorum et Malorum” (The Extremes of Good and Evil) by Cicero, written in 45 BC. This book is a treatise on the theory of ethics, very popular during the Renaissance. The first line of Lorem Ipsum, “Lorem ipsum dolor sit amet..”, comes from a line in section 1.10.32.
There are many variations of passages of Lorem Ipsum available, but the majority have suffered alteration in some form, by injected humour, or randomised words which don’t look even slightly believable. If you are going to use a passage of Lorem Ipsum, you need to be sure there isn’t anything embarrassing hidden in the middle of text. All the Lorem Ipsum generators on the Internet tend to repeat predefined chunks as necessary, making this the first true generator on the Internet. It uses a dictionary of over 200 Latin words, combined with a handful of model sentence structures, to generate Lorem Ipsum which looks reasonable. The generated Lorem Ipsum is therefore always free from repetition, injected humour, or non-characteristic words etc.