1524 McHenry Avenue, Modesto, CA
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Client's Objectives
- To achieve consistent ongoing cash returns
- To buy a property with strong appreciation potential
- To use debt to positively leverage the property’s returns
Outcome
In 2005, Centerra acquired this Tri-Valley Area, Class-A, office building for an investor group who desired consistent cash-flow and strong appreciation potential. As anticipated, several key tenants and new developments entered the market near this property during the holding period and ensured that the property was able to command top dollar when the property was sold in early 2008. A key component of the success of this project was the financing package that was negotiated for the property. After receiving bids from nearly a dozen lending institutions, Centerra was able to deliver an extremely competitive interest rate and terms for the debt on this property.
Property Specifics
- Property Type: Medical Office Building
- 132,746 sf of Class A on 6.67 acres
- 30 tenants, including 7 national tenants
- 94% occupancy
- Purchase Price: $22.9m
- $173/sf vs. $300+/sf replacement cost
- $3.1m in annual revenue
- Financing: $13.5m
- 10-year fixed-rate swap (1-year I/O)
- 25-year amortization
