LEASE/ACQUISITION OPPORTUNITY€¦ · LEASE/ACQUISITION OPPORTUNITY. Commercial Partners DISCLAIMER Realty Connect USA and/or Ron Epstein, (collectively and individually “theAgent”):

Commercial Partners470 Sunrise Highway, West Babylon, NY

LEASE/ACQUISITION OPPORTUNITY

Commercial Partners

DISCLAIMER

Realty Connect USA and/or Ron Epstein, (collectively and individually “the Agent”): Nothingcontained anywhere in this document (the “Document”) constitutes investment, legal or taxadvice. The information contained in the Document is based upon information considered bythe Agent to be reliable; however, no representations or warranties are offered or impliedabout its authenticity, accuracy or completeness, or the assumptions, calculations, estimates,projections, valuations, conclusions, interpretation or application thereof for any purposeswhatsoever. By reviewing the Document you do so at your own discretion and Agent is notliable in any way and without limitation, directly or indirectly, for any errors or omissions, norfor any loss or damage arising from the use, misuse, inability to use, or the reliance upon anyinformation contained in the Document. Investment in the properties or other investmentsreferred to in the Document carries a high degree of risk, including loss of principal and shouldnot constitute the sole or main investment of any investment portfolio. Past performance is noguarantee of future results. The value of any investment can decrease or increase and may beaffected by a wide array of market conditions, such as fluctuations in interest rates, perceivedmarket values and valuations, property yields and other factors

Commercial PartnersLocation

Sunrise Hwy

Calvert Ave

56,490 vpd

4,950 vpd

There are more than 56,000 vehicles passing the property daily on Sunrise Hwy, plus 5,000 on the service road. The

property connects to surrounding road patterns that allow for quick, convenient and safe access to local arteries

470 Sunrise

Commercial Partners

Business &Services

In addition to dense residential development, numerous schools and community services, the site is surrounded by

numerous commercial business, national retail brands, renown regional firms

Tooker Ave Forest Ave

W. Babylon Jr High

470 Sunrise

Sunrise Hwy

Commercial Partners

Property Survey

The building is ~3,800 square feet, with a 2,225 square foot footprint, on a plot of .19 acres (8,275sf). There is

ingress/egress on Burgess Ave to a 12-car parking lot behind the building

Commercial PartnersFloor Plan GROUND FLOOR: These is ~1,525sf contiguous professional office space available (can be divided roughly in half).

700sf is rented to stable long-term tenant at near market rent, less than 1 year remaining (will stay/renew)

Available: 1,525sf (divisible)

office kitchen office Conference Room

15’ x 14’

office

office office

Reception24’x13’

w/c w/ccl.

util rm

Leased: 700sf

Commercial PartnersFloor Plan

2 BR Apartment~730sf

2 BR Apartment~730sf(leased)(leased)

SECOND FLOOR: Fully leased with longstanding residential tenants in two 2-bedroom apartments (~730sf each)

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1 BR Apt. Addition~580sf

(conceptual)

Floor Plan

2 BR Apartment~730sf

2 BR Apartment~730sf(existing)(existing)

PROPOSED 2ND FLOOR EXPANSION: Pending a review of the building structure and due diligence at the Babylon

building department, a simple review shows that covering the building footprint on the 2nd level would comfortably

fit a large 1-bedroom apartment, providing an investor or user with source of significant rental uplift.

Commercial Partners

Owner Occupancy vs. Lease Analysis AcquisitionProjected

Year 10

Owner Occupancy Cost

Gross Income psf (excluding owner): $15.31 $20.43

Total Expenses & Debt psf: ($19.50) ($21.04)

Total Carry Cost psf: ($4.20) ($0.61)

Total Carry Cost psf: ($4.20) ($0.61)

Opportunity Cost psf (2.5% vs Equity) ($2.03) ($2.06)

T - Depreciation psf: (30% tax bracket) $3.82 $3.89

Net Carry Cost psf: ($2.40) $1.22

Net Carry Cost /sf: ($2.40) $1.22

Net Carry Cost /month: (surplus income at year 10) ($304.82) $154.54

Lease Occupancy Cost

Leased Space: 1525sf

Market Rent /sf: $23.00

Market Rent per Annum: $35,075

Owner Leased Rental /sf: (3.0% annual increases) $23.00 $30.01

Owner Leased Rental /month: $2,922.92 $3,813.74

Owner vs Lease Comparison, 10 year horizon

Projected Value: $1,021,088 Cumulative Rent: $402,096

Principal Loan Balance: ($545,277) Tax Deduction: (30% tax bracket) ($120,629)

Sale Proceeds: $475,811 Net Rental Cost: $281,467

Depreciation Recapture: ($55,138)

Net Proceeds: $420,673 Proceeds: $0

Acquisition Equity: ($298,765) Equity: $0

Profit: $121,908 Profit: $0

*Vacancy factor disregarded vs. rentroll & value

Own Lease

Investment Analysis

ANALYSIS - OWNER/USER: Shows occupancy cost to carry the property compared to renting same space.

Contemplates lost opportunity cost of equity and depreciation (recaptured). The “rent equivalence” of carrying

the property starts at $2.40/sf, growing to surplus income and equity at end of investment cycle

Screenshot of comparison projected owner carry vs lease

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Investment Analysis

ANALYSIS - INVESTOR: Cashflow over 7-year investment horizon shows quickly rising cashflow based on

additional apartment generating 1,750/month rental income above existing income, with a 4-month lease-up

window for vacant office. Vacancy factor disregarded for this analysis (applied per underwriting).

Screenshot of projected investment cash flow

Commercial Partners

ANNUAL CASHFLOW

Investment Year 1 2 3 4 5 6 7 8

Date (Year End) 10/1/2019 10/31/2020 10/31/2021 10/31/2022 10/31/2023 10/31/2024 10/31/2025 10/31/2026 10/31/2027

Investment Events Acquisition Capex Stabilization Exit*

Equity ($318,766) ($170,876) $0 $0 $0 $0 $0 $0

NOI $38,063 $43,729 $79,498 $81,127 $82,770 $84,428 $86,102 $87,793 $0

Debt Service - ($42,645) ($42,735) ($42,725) ($42,725) ($42,715) ($42,725) ($42,725) $0

Cashflow After Debt Service - $1,084 $36,764 $38,402 $40,045 $41,714 $43,378 $45,068 $0

VALUE & EXIT

Total Cost $962,500 $1,167,300 $1,167,300 $1,167,300 $1,167,300 $1,167,300 $1,167,300 $1,167,300 $0

Cost / psf $261 $274 $274 $274 $274 $274 $274 $274 $0

Yield on Cost 3.95% 3.75% 6.81% 6.95% 7.09% 7.23% 7.38% 7.52% -

Total Value* $1,185,272 $1,187,281 $1,211,519 $1,235,974 $1,260,656 $1,285,574 $1,310,738 $1,336,158 $0

Value / psf $322 $278 $284 $290 $296 $301 $307 $313 $0

Applied Cap Rate 7.00% 6.75% 6.75% 6.75% 6.75% 6.75% 6.75% 6.75% 0.00%

CFADS - $1,084 $36,764 $38,402 $40,045 $41,714 $43,378 $45,068 $0

Refinance Proceeds - $0 $0 $0 $0 $0 $0 $0 $0

Sale Proceeds - $0 $0 $0 $0 $0 $0 $725,456 $0

Asset Management & Fees $0 $0 $0 $0 $0 $0 $0 $0

Promotes $0 $0 $0 $0 $0 $0 $0 $0

Net Proceeds (pretax) - ($169,791) $36,764 $38,402 $40,045 $41,714 $43,378 $770,524 $0

Proceeds Per Share - n/a n/a n/a n/a n/a n/a n/a n/a

CASHFLOW ANALYSIS

Net Present Value (discounted at 1.66%) - ($26,603) $48,930 $126,944 $207,470 $290,589 $376,317 $464,719 $0

Accrued Equity - $474,264 $514,440 $555,493 $597,470 $640,408 $684,347 $1,271,436 $1,295,838

Yield on Cost - 3.7% 6.8% 6.9% 7.1% 7.2% 7.4% 7.5% -

Return on Investment - -14.5% -11.4% -8.1% -4.7% -1.1% 2.6% 68.6% -

Internal Rate of Return - -5.5% 6.2% 9.4% 10.9% 11.6% 12.0% 12.2% 0.00%

Annual Cash on Cash - 0.2% 7.5% 7.8% 8.2% 8.5% 8.9% 9.2%

Equity Multiple - 0.96 1.11 1.27 1.43 1.60 1.78 1.95 0.00

DSCR - 1.33 1.87 1.91 1.95 1.99 2.03 2.07

*Vacancy Factor Disregarded (does not affect financing metrics)

Deal Sponsor

*Adjusted for excluded/credited operational costs including:

Professional Services, Capital Reserve & Other

Investment Period

Value

Cost

Annual

Distriubutions

Return on Equity

Investment Analysis

ANALYSIS - INVESTOR: Projected Self-managed 7-year investment horizon results in a 12%+ IRR, with cash on cash

return growing to 9%+. Proceeds of $725k is well in excess of $503k combined acquisition + expansion equity.

Screenshot of investment analysis

Commercial PartnersCurrent building configuration viewed from service road

Property Photos

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Property Photos Conceptual 2nd floor addition with private rear entrance

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Property Photos Rear of property, parking

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Property Photos Reception Area

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Property Photos Interior & offices

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Property Photos Apartments

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Property Photos Mechanical, utilities

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Contact

Commercial Partners

Exceptional Real Estate Guidance

Realty Connect Commercial Partners Brokerage & Advisory Services35 Arkay Drive Hauppauge NY 11743 rccommercialpartners.com

Commercial Partners

Ron EpsteinVice President / Associate Broker

[email protected]+1 (631) 870-7180

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