TCF16 Portland Workshop LLC, a Reg D fund sponsored by ExchangeRight-affiliate Telos Capital, has purchased a 286,500-square-foot building located in Portland, Oregon’s St. Johns neighborhood. The purchase price was $17 million, comprised of nearly $9.7 million of debt financing at closing and $8 million of total equity.
The Class B building, located at 6636 N. Baltimore Avenue, can be utilized as both creative office and light industrial space. The company noted that the investment manager intends to drive net operating income by three primary strategies, which include improving the layout and adding more than 20,000 square feet of leasable space by reconfiguring an existing building; reducing operating expenses; and developing common areas and programming to increase rental rates.
“The property’s initial loan-to-value was 56.59 percent at closing on October 31, 2018 and the offering’s base-case underwriting projects a 12.87 percent annual internal rate of return for investors over a 10-year anticipated hold period,” said the company in a statement. “The offering is designed for accredited investors seeking to invest in real estate on an attractive per-square-foot basis with value-added upside potential.”
Telos Capital invests in discounted, value-added, and opportunistic real estate on behalf of its principals and investors. Since its inception, the company has invested in real estate whose aggregate value exceeds $250 million across 16 sponsored offerings, with the principals having invested more than $20 million of personal capital alongside investors.
Telos commented that four of those offerings have gone full-cycle, with net annual internal rates of return to investors ranging from 11.2–29.5 percent. The principals of Telos Capital and ExchangeRight have acquired, or have under contract more than $1.7 billion of assets, including more than 500 properties, which total more than 12 million square feet and are diversified across 38 states.