Federal Express Ground Distribution Facility – Ocala, Florida

This property is a 65,516 square foot distribution center strategically located between Jacksonville and Tampa along the I-75 corridor and US Highway 27 and US Route 301. The property is leased to FedEx Ground Package Systems, Inc. under a ten-year lease, with two additional five-year options. The property was purchased on a cap rate of 8.6%.

We secured a 70% mortgage at an interest rate of 6% amortized over 30 years. After deducting for management fees, principal and interest payments and replacement reserves, the cash-on-cash return is 9.77%. The effective rate of return is 13.54%.

Three years after the purchase of this property we expanded the facility by 18,744 square feet and re-started the ten-year lease term. The increased rent from the expansion exactly covers the loan we secured for the expansion. After seven years, the owner’s return will increase substantially when both loans mature and the property is refinanced.

See also: Real Estate Investments

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