Posted on September 17, 2021 by fordadmin -
MHP Land subject to a Ground Lease – Orange County MHP
Description – A ~100 space park in Orange County was subject to 5 years on a 65 year ground lease. The asset was owned by a trust and managed by a trustee who was responsible for divesting of the land. We worked with the owner and provided the highest price and best terms.
The Trust’s goals:
- Execute as smooth of a transaction possible
- Find a buyer willing to wait 5+ years for the ground lease to expire
- Find a buyer willing to accept a <2% return while the ground lease was effective
There were several steps to this ground lease purchase:
- Step 1: Rutherford provided the highest price and best terms for the Trust
- Step 2: Rutherford purchased the land subject to the ground lease
- Step 3: Subsequent to closing the land, Rutherford built a strong relationship with the ground lessee
- Step 4: Over 1 year after closing the land, Rutherford purchased the remaining term of the ground lease from the ground lessee.
|
BEFORE |
AFTER |
| Ground Lessor and Lessee: |
Originally signed a 55 year ground Lease, Lessor and Lessee had strained relationship |
Both parties had no ongoing responsibility to each other |
| Remaining Lease Term: |
12.5 Years |
– |
| Property Type: |
Leased fee and Ground Lease |
Fee Simple |
| Ground Lessor Cashflow: |
$500,000/Year |
$1,400,000/Year |
| Ground Lessee Cashflow: |
$600,000/Year expiring in 12.5 years |
$740,000/year |
| Access to Equity: |
Trapped equity |
Expedite access to capital 12.5 years earlier. |
Posted on July 1, 2021 by fordadmin -
Portfolio Purchase – Santa Cruz County Portfolio owner
Description – The owner of a Santa Cruz County Portfolio had 18 assets that included single family residential, multi-family, and commercial. The owner was also the original developer of the assets. The owner’s original plan was to give each of their children a set of assets as their inheritance. However, the parents realized that their children didn’t want the responsibility of owning and managing assets, but wanted passive income.
The owner ultimately wanted to buy a Walmart Grocery store and a Rite Aid, but they knew they couldn’t do that by selling 18 individual properties. They were planning to sell 3-4 assets at a time, own 3-4 NNN assets and then sell those NNN assets and buy a Walmart Grocery story and Rite Aid. Their plan included 32 separate transactions. By buying the portfolio, we reduce the number of transactions to 3.
The Remaining Partner’s goals:
- Buy passive income assets (Walmart Grocery store and Rite Aid)
- Reduce the number of transactions
- Find a portfolio buyer who would buy a SFR, multi-family, and commercial assets
- Have flexibility and time to find the right 1031 exchange upleg transactions
There were several steps to purchase this portfolio:
- Step 1: Rutherford provided the seller with a Put Option which required that Rutherford close on the portfolio within 30 days of notice; the seller had 5 months to exercise the Put Option
- Step 2: Seller exercised his Put Option within the 5 month period
- Step 3: Rutherford purchased the portfolio
- Step 4: Seller purchased a Walmart Grocery store and Rite Aid; this reduced the number of transactions from 32 to 3 for the Seller for him to complete his ultimate plan and goal.
|
BEFORE |
AFTER |
| No. of Properties: |
18 |
2 |
| No. of Potential Transactions to complete trade: |
32 |
3 |
| Property Type: |
SFR, Multi-Family, Commercial |
Walmart, Rite-Aid Pharmacy |
| Property Age: |
20-30 years |
Brand New |
| Debt: |
Minimal |
15 Year Self-Amortizing |
| Pre-Tax Cash Flow: |
$429,000 |
~$444,000 |
| Post-Tax Cash Flow: |
$230,000 |
~$444,000 |
| Management: |
Hands-on management |
No management |
| Maintenance: |
Significant deferred maintenance |
No maintenance(triple-net lease) |
| Depreciation: |
No more depreciation |
New depreciation schedule |
| Other: |
Much effort to coordinate disposition of assets |
Estate planning goals for long-term owners met |
Posted on July 1, 2021 by fordadmin -
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Posted on March 23, 2021 by fordadmin -
LA County MHP Investors
Description – The LA County MHP property was a 500+ space mobile home park. The asset was owned by 11 partners with a variety of goals and interests. Out of the 11 partners, 9 wanted to sell their interests and 2 partners wanted to retain ownership in the asset. Those 2 partners wanted to purchase additional interests from the selling partners as well.
The Remaining Partner’s goals:
- Replace selling partners with a new partner with the same business philosophies and management style
- Establish new long-term debt for the property
- Improve management at the park
- Find a partner to collaborate and invest together with into the future for new assets
- Create durable income, cash flow plan
There were several steps to this fractional interest purchase:
- Step 1: Rutherford and the remaining partner worked on a voting structure that was sustainable for collaborative future decision-making
- Step 2: Rutherford purchased < 50% fractional interest of the property from the selling partners
- Step 3: Rutherford and the remaining partner placed new, long-term debt on the property
- FStep 4: The selling partner is responsible for property management of the property and Rutherford is involved in asset management/li>
|
BEFORE |
AFTER |
| Number of Partners: |
11 |
2 (One original Partner, one new Partner) |
| Ownership Structure: |
Partnership |
Partnership |
| Purchase (100% or Fractional) |
1 Partner wanted to hold interest long-term; 10 Partners wanted to sell |
Purchased Fractional Interest < 50% from selling partners; Remaining Partner purchased the balance of selling partner interests |
| Management |
3rd Party Management |
In-house management |
| Operating Efficiency: |
$200,000 delinquencies |
Management eliminated on-going delinquency |
| Issues |
Different goals between the partners |
Business philosophies and ownership horizon align between partners |
Posted on March 23, 2021 by fordadmin -
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Posted on March 23, 2021 by fordadmin -
Joint Venture – MARIN FAMILY PORTFOLIO
The Marin Family Portfolio owners had originally built a portfolio of 11 assets throughout Marin County. The family had more than 30 beneficiaries and had the goal to consolidate its interests and reduce ongoing management of the assets. Additionally, the existing assets needed significant capital expenditure and infrastructure upgrades.
The family’s goals:
- Eliminate ongoing management
- Eliminate liability and financial risk of improving the existing portfolio
- Find a joint venture partner who can provide additional capital and management expertise
- Effectively estate plan
- Create durable income, cash flow plan
- Implement a plan that reduces the dependency on any one trustee’s involvement for the plan to succeed
There were several steps to this joint venture:
- Step 1: Rutherford purchased the portfolio from the family
- Step 2: Rutherford found a set of assets to purchase together with the family
- Step 3: Rutherford and the Marin Family acquired a new set of assets together
- Step 4: Rutherford manages the new assets and provides transparent reporting to all beneficiaries
|
BEFORE |
AFTER |
| No. of Properties: |
11 |
2 |
| Phase 1 |
One family member was responsible for the asset and property management of the assets. There were 30+ beneficiaries that he was responsible to coordinate and support. |
Purchased the apartment portfolio |
| Phase 2: |
– |
Rutherford to sourced 100+ Unit Apartment Building and East Bay MHP |
| Property Type: |
Multi-Family |
100+ Unit Apartment Building and 400+ Space mobile home park |
| Property Age: |
40-50 Years |
2001 & 1971 |
| Debt: |
Minimal |
10 Years fixed |
| Pre-Tax Cash Flow: |
$400,000 |
$1,100,000 |
| Post-Tax Cash Flow: |
$300,000 |
$1,100,000 |
| Management: |
Hands-on management |
No management |
| Maintenance: |
Significant deferred maintenance |
Low maintenance |
| Depreciation: |
No more depreciation |
New depreciation schedule |
| Other: |
Much effort to coordinate disposition of assets |
Estate planning goals for long-term owners:
- 1. Diversify out of one area
- 2. Reset a new cost basis for tax benefit
- 3. Streamlined management
- 4. 1031 tax-deferred exchange
|
Posted on March 23, 2021 by fordadmin -
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Posted on March 23, 2021 by fordadmin -
Master Lease – Southern California Lease Purchase
Description – A university in Southern California owns the land on which a 500+ unit apartment building was built. There is a 99 year lease on the land and upon the end of the term, the improvements will revert back to the Lessor. Rutherford (Lessee) is responsible for the improvements and all associated liability.
The Lessor’s goals:
- Create durable income, cash flow plan
- Eliminate ongoing management
- Eliminate liability and financial risk of the improvements
- Receive the improvements back in the future upon the term of the lease
There were several steps for this lease:
- Step 1: Rutherford purchased the improvements subject to a 99 year lease
- Step 2: Rutherford asset manages the property and provides ongoing lease payments to the Lessor
- Step 3: Lessor to receive back the improvements upon the lease term
|
BEFORE |
AFTER |
| Ownership Responsibility: |
Daily property and asset management |
No management responsibility |
| Liability: |
Full responsibility for asset and liability |
Rutherford takes full responsibility for the asset and pays property insurance |
| Income Durability: |
Based on market fluctuation |
Provides ground lease payments regardless of the market changes |
| Cashflow: |
$600,000 |
$800,000 |
| Lease Term: |
– |
34.5 Years |
| Ownership Structure: |
Fee ownership |
Fee ownership |
| Management: |
3rd Party Management |
In-house management |
| Property Taxes: |
Current property tax basis |
Current property tax basis |
Posted on March 12, 2021 by fordadmin -
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.
Recent Comments