CURRENT PROPERTY
Broomfield Industry Center
Broomfield, CO
ASSET CLASS:
Industrial
ASSET SUB-TYPE:
Shallow Bay Light Industrial
BUILDING:
35,000 sq ft, (14) 2,500 sq ft units, metal exterior
Investment Report
Thesis
Overview
- Small unit industrial is a good performing asset in economic downturns.
- Stays fully occupied nearly all of the time due to high demand and low inventory of like product.
- Very few, new small-bay building spaces (0-6,000 sq ft) have been created in the past 10 years.
- The building was purchased with a projected net annualized return of 13.03%.
- There is a light-rail stop that will be created a few blocks away within the next 10-15 years. This will change this building’s highest and best use to something with higher density.
- The northwest Denver submarket for industrial has a vacancy rate of 1.7%, which is very low.
- Broomfield County has not created any more industrial zoning creating the potential for strong demand.
Risks
- 7 of the 14 units are up for renewal this year.
- We will stagger leases going forward to reduce a potentially large amount of turnover.
- Another risk is tenant credit. We are trying to improve credit for each time a unit becomes available.
OUTLOOK & EXIT
- Work is still being completed to remedy all water issues on-premise.
- The building is currently fully occupied.
- The property is performing as expected with a forward projected net annualized return of 14.03%, which includes the leverage note.
- The unlevered equivalent return is a weighted average annualized net 11.02%.