New Deal Offering: Gilroy, CA

We are pleased to announce that we have placed 255 Mayock Rd, a 5-acre IOS property in Gilroy, CA, under contract. The property features several buildings totaling 23,954 square feet. The purchase price is $7.4 million (total anticipated cost is $8.08 million) and we are raising $2.97 million in equity. We expect to close in late December.

1. Tenant Mix & Leasing Momentum:
The seller (RMC Engineering) will lease back the smallest building for their parts business. The in place landscaping tenant (T3 Materials) is expected to sign a 5-year lease, and a well-capitalized RV company is negotiating to lease the paint/repair facility, office space, and a large portion of the yard. At close, the property will be ~60% leased, leaving one highly functional warehouse (11,885 SF) and an acre of yard to lease.

2. Specialized Improvements:
The site includes a large scale equipment and vehicle paint facility with a 70’ pull through booth, 70’ sandblast booth, prep area, and multiple service bays. These improvements are fully permitted and create unique leasing value for tenants in automotive, RV, or heavy equipment industries.

3. Attractive Basis & Market Strength:
After the breakdown of their previous deal with Penske, the owner is now seeking a quick sale. Our strong initial offer and follow up positioned us as the broker’s first call. We are acquiring the property for $7.4M, below our prior underwritten price of $7.6M. Located in Gilroy’s Obata Business Park and minutes from US-101, the property benefits from a tight submarket (4.7% vacancy) and strong demand from Silicon Valley overflow tenants.

4. High Stabilized Yield:
Once the final vacancy is leased, we expect an 8.9% stabilized yield. The site’s zoning (M2, Heavy Industrial) further expands potential tenant demand, ranging from logistics to heavy manufacturing.

5. Compelling Returns:
We project a 22.7% LP IRR and a 2.68x equity multiple over a 7-year hold period, with upside from an earlier sale. A 4-year hold would yield a 30.0% LP IRR and a 2.15x equity multiple. In both scenarios, we conservatively underwrite 9 months of downtime to lease the vacant warehouse and yard.

Please feel free to reach out to me directly with any due diligence questions or book a meeting using the link below.