Ownership closed on this vacant property on March 23, 2018 at a price of $1.4M. We had already been in discussions with several different users for the property prior to closing, one of which, EMT (environmental lab user) showed significant interest in either leasing or purchasing the property. After about a month of discussions and some further negotiations, we entered in to a contract with EMT on May 14 for the purchase of the property at a price of $2.075M. This deal took quite a bit longer to close than our typical deal due in large part to the amount of construction EMT needed for their laboratory and the nature of SBA financing. The subsequent government shutdown put a hold on SBA deals. We did have non-refundable earnest money in the amount of $75,000 from the Purchaser. In the meantime, we signed a short-term (1 year) lease with EMT that started on 12/1/18 for $20,000/month NNN. This will more than cover our holding costs (debt obligations, taxes, operating expenses and our investor preferred rate of return) until this Purchaser is ready to close (which was unknown until the government reopens). At this point, we wanted to hold the property past the 1-year mark to avoid short-term capital gains for our investors.
After one year, we were pleased to close on the sale to EMT and provide our investors a very strong return (28% IRR), and we were pleased that we were able to avoid short-term capital gains on the sale.