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We seek warehouse/factory, office, retail strip, office/warehouse, single or multi-tenant buildings that we may find profitable.
Good locations in the surrounding San Antonio metropolitan area are desirable. Kerrville, New Braunfels, San Marcos, Austin, Seguin, and Castroville are important if they are at least 25% occupied by the Seller. The deal must be larger if the distance from San Antonio is greater.
We also consider “Packages” of good properties.
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We target nice, cooperative, non-greedy business people that are established, have good credit, and that are willing to show their financials and cooperate with us in our checking the credit risk we will have to take in order to help free up their cash.
For us, life is just too short to do business with toughies.
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We need a minimum 15.5% rate of return.
A 10-year minimum lease on our form—triple net—with expenses escrowed monthly and no cap. Landlord is responsible only for the walls, roof and foundation; Tenant maintains everything else. HVAC replacements to be with Landlord-approved manufacturers; and the vendors of some services to tenant (roofers, plumbers, electricians, HVAC repair, locksmiths) must be on Landlord’s approved vendor list. Warranties of new equipment are to be assigned to Landlord and Tenant or either of them. Landlord is to prior approve leasehold improvements and signage.
After the first year, rents must stair step to keep pace with expected inflation—ranging usually from 3.5% to 5.85%—no CPIs. Percentage rents will be required only on retail businesses in retail locations with annual retail sales exceeding $2,500,000.
Certain business or property types may require lease ending dates of a certain time per year for re-marketing purposes. Renewal Options at specified stair step or percentage increases must be exercised at least 36 months out. Recordable security interest in inventory, furniture, and fixtures; and a fileable UCC-1 are required.
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Seller’s Broker must report to the Seller’s Decision Maker. Please don’t waste our time with a subordinate—we want to make a deal.
Closings to be in San Antonio, at title companies of our choice (so we can concentrate the business and ease the process). But the price of the policy furnished Landlord by Seller is the same, since Title Policy prices in Texas are regulated by law and based on sales price alone. Taxes and insurance are pro-rated to closing date. Real Estate Appraisers must be hired by our Lender and paid for by Seller at closing.
Seller must have local legal counsel for the sale/leaseback transaction (dealing with non-local lawyers wastes everyone’s time and risks blowing the deal for everyone because they don’t understand how business is done in this locale). This is not a negotiable feature.
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Due diligence includes, but is not limited to property appraisals; rent rolls; leases of other tenants; all supporting information Seller may have or know about; copies of past, present or threatened claims, litigation or administrative actions relating to other tenants, property taxes, damages to the asset, construction of or condemnation of the asset.
These inspections may be required:
• EPA, TNRC Stage 1s (or as required by our financing source)
• ADA (or as required by our financing source)
• Inspections to be done at Buyer/Landlord’s cost
• HVAC
• Structural
• Roof
• Demographics
• Soil
• Pest and termite
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