Analysis of Investments

Core Pacific Crosslakes

Core Pacific

Core Pacific Crosslakes is an investment into five industrial assets that have a total of 16 tenants. The properties are located in Grand Rapids, Michigan.

Investment Highlights

  • Yr. 1 Cash-on-Cash 6.10%
  • Initial Occupancy 100.00%
  • Est. Time Horizon 10 years YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 9.16%
  • Investor Purchase Price $39,100,000
  • Total Offering Size $19,150,000

Loan Information

The loan totals $19,950,000 and is from Jefferies LoanCore LLC. The term is for a total of 10 years with the first 4 years being interest only. When amortization kicks in it will be based on a 30 year schedule. The interest rate is fixed at 5.224%

  • Yr. 1 DSCR 3.25
  • Loan-to-Offering 51.02%
  • Hold Period DSCR 3.14

Tenant Information & Lease Terms

There are 16 tenants at this property. None of the tenants have an investment grade credit rating from one of the major credit rating agencies. The major tenants at the property include, Eagle Film Extruders, Wacker Neuson Production Americas, Pipp Mobile Storage Systems, Tubelight, and Premier Protective Packaging Corporation. 

Key Positives

  • The leases are NNN which limits the potential costs to the trust in maintenance of the properties.

  • The initial Debt Service Coverage Ratio is high (3.25).

  • The investment is using moderate leverage (51.02%) which reduces the risk of foreclosure.

Key Risks to Consider

  • The investment will have significant turnover of tenants during the hold period.

  • If the sponsor does not fill the rollover vacant spaces or renew leases, there will be cash sweep provisions that come into play in year 4

  • The projected economic occupancy is 100%. This does not allow for any period of less than 100% occupancy for the investment to cash flow as projected by the sponsor.

  • The Phase I identified Recognized Environmental Conditions (REC's) at the property that will require further investigation. These reports have not been completed.

  • CORE Pacific has several principals from CORE Realty Holdings who had 27 programs between 2005 and 2008. 4 of the properties were foreclosed upon and returns varied from these foreclosures to a return of nearly 200%. None of the programs met the anticipated cash flow projections.

Investment Sponsor Information

Core Pacific

According to the sponsor's website: "Core Pacific Advisors, LLC, (CPA) is an investment advisory firm with expertise in commercial real estate and real estate-related investments. An affiliate of CORE Realty Holdings Management, Inc. (CRHMI), Core Pacific Advisors is focused on creating and implementing client-focused commercial real estate strategies that provide superior income, capital preservation and growth potential, all delivered with the highest level of integrity, communication and service.

With decades of experience in buying, managing and successfully selling commercial real estate in a variety of market conditions, the CPA team concentrates on identifying institutional quality investments with the potential to outperform the market while at the same time managing risk.

Of course, real estate is a business built on relationships, including those with sellers, brokers, service providers, buyers and most importantly investors. Over the years, CPA has developed strong relationships throughout the commercial real estate community and earned the trust of thousands of investors nationwide."

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