Regular Daily readers know PBRG offers a “holy grail” investment opportunity: access to sophisticated private deals.
You’ll never find these opportunities trading in a public marketplace. Experienced professionals with their own areas of investment expertise provide investment opportunities. We call this portfolio of private deals the “DealBook.”
DealBook investment opportunities vary. There are biotech startup ventures… disruptive technology endeavors… “turnkey” residential rental real estate investments. Some are commercial real estate deals, like the one you’ll see below.
This one was offered by Mark’s brother, Justin Ford. Justin’s a multimillionaire real estate investor who owns hundreds of units in several U.S. states.
Justin hasn’t found an opportunity this good in two years. Here’s what he had to say…
From Justin Ford in the DealBook: This property gives me déjà vu. Why? It reminds me so much of the hotel property we bought in 2013.
Thus far on the Vero Beach, Florida, property, we’re about to return 75-80% of investor capital in just two years. That’s on top of 8% cash yields, pre-refinancing.
I think this new property could do even better.
It’s a 235-room motel and restaurant in Melbourne, Florida. It sits on 8.53 acres with 300 feet of frontage on the highway, east of I-95.
Here’s an aerial photo of the property. (The property is outlined in yellow.)
Various operators have rotated through the hotel over the years. The property is drab, as is its clientele, but the building has good bones. It just needs some TLC.
There’s also a restaurant on the property. Unlike the hotel, it’s quite good. I can tell you from experience: The Coronas were ice cold, and the food was delicious. Alone, I think it’s worth $1 million-1.4 million. Under bankruptcy laws, we won’t be obligated to continue with this tenant, but we will try to keep them.
So, how does the Melbourne property compare to the one in Vero?
- Both the Melbourne and Vero properties have the same relative location: East of I-95 on the south side of a major east/west corridor. That’s important. If you’re going to town from I-95, you’ll pass our hotel. And you’ll pass it on the way back, too.
- Both properties are distressed sales. The Vero property was bank-owned. The Melbourne property is a court-ordered bankruptcy sale. That gives us the opportunity to buy right. At our highest price, the Melbourne property is a 25% discount to market value and a 50% discount to replacement value.
- Both properties sit on large lots. And, like we did in Vero, we’ll renovate the Melbourne property to create a greener, more attractive, more welcoming environment.
- Both properties were capital starved and in need of TLC. We have the right management and renovation experience for this type of property.
- And both properties are in the growing hospitality market with a fair amount of local competition. We’ve been successful in Vero by buying right and establishing competitive advantages. We’ll do the same with the Melbourne property.
Bottom line: This is a great deal. Our investment group must return at least 60% of investor capital within 30 months of the closing date. If not, investors’ cumulative preferred return will go up to 12.5%—until we return at least 60% of the initial equity capital. Investors still maintain their equity stake after their capital is returned.
Reeves’ Note: The DealBook is the exclusive province of our “partners” in our business: PBRG Infinity subscribers. The deal you see above is now closed… but two current DealBook opportunities are still open. Infinity subscribers will receive access to at least 12 new deals per year moving forward. (Many require you to be an accredited investor, but not all. One of our two current open deals does not.)