Case Study Property 2
9-year hold / Current Yield 9.2% / Total Return 13.5%
Acquisition of a large, warehouse and distribution facility leased to a credit tenant; located in Ames, IA. Due to the sale / downsizing of the tenant, this case study highlights Cardinal’s disciplined focus on big box properties which facilitates retrofitting and releasing.
Investment Overview
Investment Hold: 04/2005 – 07/2014
Investment Thesis: Investment represented the opportunity to acquire a well-positioned, warehouse and distribution facility totaling 577,000 sft. in Ames, IA. The acquisition featured a lease to a credit rated Fortune 500 plastics distributor with 10 years of remaining term and an adjacent manufacturing facility in which the tenant had invested approximately $100M in operating equipment. The tenant was subsequently sold and downsized, at which point Cardinal secured two additional tenants, increasing occupancy back to 100% and subsequently sold the property.
Returns: In spite of the sale to and downsizing by the new tenant, Cardinal generated strong risk-adjusted returns over the 9 year hold period: 9.2% Cash-on-Cash, 13.5% Total Return and 2.3x Equity Multiple.
Transaction Overview
| Price | $25,582,668 |
| Price per Sft | $44 |
| Entry Cap Rate | 7.3% |
| Equity | $5,300,000 |
| Debt | $20,282,668 |
| Acquisition Strategy Type | Yield |
Investment Returns
| Net IRR (Leveraged) | 13.5% |
| Cash-on-Cash (Avg.) | 9.2% |
| Equity Multiple | 2.3x |
| Hold Period | 9 Years |
Property Overview
| Property Type | Warehouse |
| Year Built / Renovated | 1999, 2002 |
| Total Square Feet | 576,876 |
| Occupancy | 100.0% |
| Lease Term Start | 2003 |
| Lease Term End | 2018 |
| Lease Structure | NNN |