Avistone purchased, in November of 2014, the Northgate Business Center, a Class A, 139,500 square foot, multi-tenant business park located in Sacramento, California. The company acquired the stabilized Project for $11,100,000 ($79 per square foot), which is approximately 65% of its replacement cost.
This investment provides a 8.04% cash-on-cash yield in the first year and an estimated 8.23% average cash on cash yield over 5-year hold. Avistone estimates that the Northgate investment will provide a 14% annualized total return (IRR) or a 1.76x multiple over the investment horizon. That is a $100,000 investment in this project is estimated to return $176,000 upon sale after the 5 year hold.
Avistone principal Richard Kent commented on the favorable risk profile of this multi-tenant investment, “this property is leased to 43 tenants and no tenant occupies more than 8% of space, therefore no single tenant can’t significantly affect the cash flow of the Northgate Business Center, which reduces risk compared to single tenant industrial property.” Kent added that “purchasing the business park for a price that is below replacement cost also helps to reduce risk.” Mr Kent went on to comment that “business trends, especially the growth of e commerce and the recent federal funding of large levee projects in Sacramento, favored the growth in value of multi-tenant industrial real estate in this market.”
Avistone a premier commercial real estate investment firm specializes in the Multi-tenant Industrial Real Estate market. Avistone is currently acquiring and managing quality, stabilized multi-tenant industrial property from $10 to $20 million. This strategy helps to make our investments more secure with increased appreciation upside potential. Avistone invest its own money in each deal. If you would like more information regarding this acquisition or Avistone, please contact Daniel Culler at 949.682.7202 or via email at danc@avistone.com