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Friday, September 11, 2015

Rich Uncles Buys Sacramento's Levin's Auto Supply

Hello again!  The news today (9/10/15) coming out of Costa Mesa, CA, home to Rich Uncles Real Estate Investment Trust I, is bullish for interested investors, and reaffirming what's come to be expected (excellent performance) for current ones.  First this:  

Announcing our Latest Acquisition

Levin's Auto Supply
Sacramento, CA area - $3,750,000

Summary. The Company has purchased a property in one of Sacramento's strongest industrial sub-markets, Levin's Auto Supply ("Property").
The Property is a 76,000 sq. ft. warehouse on a 4.3 acre site. It is located near the major thoroughfares of Power Inn Road and Elder Creek Road and offers freeway access within 3 miles to each of the 99 (west of the Property) and the 50 Freeways (north of the Property).

The Property is subject to an 8 year Triple Net ("NNN") lease ("Lease") with a long term profitable business owned by the same family for 61 years. The tenant’s 100% owner personally guarantees the lease for the first three years. The tenant is responsible for paying all property related expenses (tax, insurance and maintenance). The tenant’s business is the manufacture and distribution of aftermarket automotive accessories sold in department stores.

Why we like this deal. 
  1. Our purchase price equals $50 per building square foot; and our research indicates that market values are in the order of $80 per building square foot.  Similarly, the annual rent ($3.50 per square foot per year) is significantly below market rents.
  2. 2% annual rental increases during the 8 year lease term provides an inflation hedge.
  3. The Lease is personally guaranteed by the business owner for the first 3 years.
  4. The $3.75 million purchase price is projected to show a year one all cash yield of 7.1% and a leveraged cash on cash yield of 7.9%. Annual rent increases will increase these yields over time. 
  5. The purchase price, the low rent, and the nominal re-leasing expenses associated with simple industrial properties like the Property contribute to making the Property highly releasable at lease expiration if the tenant elects to then vacate.

Lease, Lease Guarantor and Environmental Review. Levin's Auto Supply, LLC is 100% owned by Mr. & Mrs. Douglas Stanley (lease guarantors) of Sacramento. The firm was founded in 1921, purchased by the Stanley Family in 1954 and has operated from the subject location since 1988. 
Property condition assessment, environmental Phase I, flood and seismic reports were completed without any significant issues. 

Please visit RichUncles.com or contact us at info@RichUncles.com should you have any questions. 

Later in the day investors received an email from RU requesting their consent to increase the current share cap of common stock by 100%, from 2,500,000 shares to 5,000,000!  Extra! Extra!...Read all about it:

 Rich Uncles Real Estate Investment Trust I began its offering of 2,500,000 shares ($25,000,000) of common stock to California residents in April 2012. In 2015, our share sales volume has increased dramatically and we are rapidly approaching the sale of the maximum number of originally authorized shares.
            Because of our success in raising and investing funds, we believe it is in the best interest of Shareholders to continue our sale of REIT shares to increase the size and diversity of the REIT. To do this, we need to increase the number of authorized REIT shares under our REIT's Declaration of Trust and California law. Approval by a majority of the existing Shareholders is required to increase the number of authorized shares. We are writing to request that you approve this increase.
            As you may be aware, we are planning to launch a national REIT offering in 4Q15.  Most likely when the national REIT is ready to go, we will cease selling shares in the California REIT. In the meantime, however, we want to accommodate the additional demand for shares.
            Below is a resolution authorizing an increase in the authorized REIT shares to 5,000,000 common shares. Our Board of Trust Managers recommends that the Shareholders consent to this resolution. To expedite the process and save costs, we are seeking your written consent. A copy of the text of the resolution seeking the share increase can be found at the link below. 
            We need the approval of holders of a majority of the outstanding shares to adopt the resolution and increase the share number. Please assist us by responding to this email and indicating your consent below...

The RU portfolio currently holds 22 Del Tacos, a Chase Bank, 3 Chevron Service stations + ExtraMile Mini-Marts, and now a Levin's Auto Supply warehouse.  That's diversification!  And with the momentum the company has right now, fueled by the high demand for shares, there is sure to be more properties added to the mix as soon as another winner, so to speak, gets in the crosshairs of Uncle Harold and his property selection team.

Want more info about this investment opportunity from an investor's perspective?  Leave a comment, or email me: info@commoncoremoney.com.  Thanks for reading!  Until next time.

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