What We Do
Our Story
Core Values
Meet the Team
Our Approach
×
Situated in the San Gabriel Valley, nestled between East Los Angeles and the Inland Empire, Arrow Grand boasts a sizable, well-structured building that is roughly 72,000 square feet on a 3.3-acre site. While its pricing ($236/ft) parallels rates often seen in the Phoenix market, it’s essential to recognize its prime location within the sought-after Southern California region. In addition, our going-in land price is $119/ft, which is comparable to other sites in the market today that are undeveloped. This meets our criteria of being below replacement cost in multiple ways.
The property’s current in-place rent, at $.90 per square foot per month, is approximately 44% below current market rents. The dramatic mark-to-market opportunity positions us well to create value as we bring the in-place rent to market ($1.60/ft) in June of 2024 when the current lease expires. We have estimated just over $1 million for future improvements, including selective interior modifications, a new roof, fresh paint, and essential exterior refurbishments. Once the improvements are completed, we anticipate the property’s annual yield to rise to roughly $1,400,000, which translates to a 7.7% cap rate. Arrow Grand’s strategic location, flanked by two pivotal state highways, combined with an impressively low market vacancy rate of 1.5%, underscores the minimal risks associated with this opportunity. In essence, with its below replacement pricing and clear path to adding value in a flourishing submarket, Arrow Grand is a compelling investment opportunity.
Lastly, we are excited to announce our partnership with an institutional equity partner, AIG / Corebridge Financial, one of the world’s largest insurance companies. They will be contributing roughly $8M of the required equity for this venture. The remaining equity will be contributed by ourselves and our network of friends and family, including you. With a projected internal rate of return of 16.58%, this investment presents both promising returns and a trusted partnership framework, in addition to the best deal we’ve seen in over 12 months.
Despite challenging economic times over the last 18 months, we refused to sacrifice our underwriting guidelines and investment thesis and are now excited to present the first deal that has met those underwriting guidelines and investment thesis.
Arrow Grand Single Tenant Industrial
753 Arrow Grand Cir, Covina, CA
Arrow Grand represents an ideal mark to market opportunity. We are purchasing the property at $236/SF which is a basis that we typically see in the Phoenix market, but for a functional building in a stronger Southern California market. Other properties in the San Gabriel Valley submarket are trading in excess of $350/SF which represents an incredible spread for our deal.
In place income through June 2024 at $.90/SF/month represents a 44% below market rate, providing enough income to remain cash flow positive as we work to turn the lease over and lease up at new market rates. We have set aside a conservative budget of just over $1,000,00 or $15/SF for planned improvements which include demolition of drop ceilings and non-load bearing walls on approximately 20k SF of space bringing it back to traditional warehouse space, exterior/interior paint, roof repairs and sealing/slurry coating the exterior asphalt. These capital improvements will allow us to quickly bring the space up to market leasing expectations and make sure we are maximizing the value of the space in short time. We expect to see income on the property increase to just under $1,400,000/year with the new lease rate of $1.60/SF/month NNN, pushing our stabilized cap rate over 7.4%.
Strategically located in the San Gabriel Valley between two major statewide freeways, and with market vacancy rates at near 1.5% levels the deal represents minimal lease up risk and will allow us to reposition the property as a stabilized asset.
Overall the great basis of the property combined with a short below market lease in a great submarket position Arrow Grand as a great investment with significant upside.
The San Gabriel Valley is the sole market in greater Los Angeles to record positive net absorption in Q2, reaching 538,923 SF. The overall vacancy rate dropped to 1.5% from 1.9% quarter over quarter but remains 80 basis points higher than the figure from a year ago. Total leasing activity exceeded 2.1M SF for the third consecutive quarter, significantly surpassing the quarterly average of 1.5M SF. Average asking rents remained unchanged at $1.78 NNN, showing a $0.04 increase compared to the same period last year and a 109% rise from three years ago. Construction activity hit a new record high, with 4.2M SF of new developments currently underway.
Arrow Grand Single Tenant Industrial
753 Arrow Grand Cir, Covina CA
CTT – Cal Hawk tools is an importer and wholesalers of tools, established in 1978 and incorporated in California. They utilize the subject property as a location to receive tools in bulk, and breakdown and sell to other wholesalers or direct to contractors who purchase tools in bulk. They will be leasing the building while downsizing their operations and relocating to a new site in Southern California.
Arrow Grand Single Tenant Industrial
753 Arrow Grand Cir, Covina CA
Hanson Capital Group is a team of commercial real estate experts with a combined 50+ years of experience in the industry, offering a unique approach to investing in commercial real estate. We manage over $75mm in equity and oversee over $250mm in assets. We specialize in value-add industrial and multifamily product types as well as horizontal multifamily development, opportunistically shifting our focus from one specialty to another to capitalize on market inefficiencies as they present themselves. This diversified approach to investing provides the flexibility necessary to navigate complex and evolving market conditions and cycles, and affords us with the ability to stay several steps ahead of trends and potential headwinds.
We are on the path to building a portfolio of industrial investment product that will be securitized or sold to either an institution or REIT in $50-$100mm tranches. We have developed a proprietary system for sourcing and securing off-market industrial investment product (including establishing programmatic broker agreements to ensure that we are the broker’s first call on deals that meet our investment criteria) which provides unprecedented access to deal flow. Our primary focus is on the Phoenix and Dallas-Fort Worth metropolitan statistical areas which have become the shining stars in industrial real estate.
In 2021, we launched Hanson Capital Industrial Fund I, which is a $100M private equity fund dedicated exclusively to acquiring industrial investment product. Our affiliate, HC Industrial Fund I GP, LLC acts as the general partner and has full discretionary authority to deploy the capital raised into the fund as opportunities present themselves, which allows the fund to act quickly and provide assurance of closing, which further enhances our ability to secure the very best opportunities.
In addition, as an affiliate of Hanson Capital, LLC, a state licensed bank that originates hard money and bridge loans and which manages in excess of $40mm, we are uniquely prepared to work with our lending partners to secure the very best terms and to make their review and underwriting process as easy as possible.
Lastly, our organization’s core principals are to always remain relationship minded and not transactional, and always do what we say we will do. With this focus, we look to develop strategic alliances that produce mutually beneficial results for all involved for years to come.
Arrow Grand Single Tenant Industrial
753 Arrow Grand Cir, Covina CA
Originally from Lake Oswego, Oregon, Chris settled in Scottsdale, Arizona after graduating from the University of Arizona in 2005. Chris originally spent 3 years in the mortgage business before recognizing an opportunity in real estate during the Great Recession. Chris entered the real estate market as an individual investor before forming Hanson Capital Group, LLC as an auction bidding service provider for many of the industry’s most recognizable institutions. Hanson Capital Group was credited with having acquired over 1,500 single family homes out of foreclosure on his own behalf and assisting these institutions in under 6 years.
While Chris was acquiring single family homes on behalf of institutions, he discovered that he could dramatically increase bidding business through the facilitation of acquisition funding, and in 2010 Chris established Hanson Capital, LLC as a state licensed mortgage bank. Hanson Capital continues to operate today as a hard money and bridge debt provider and is licensed in multiple states across the country. Hanson Capital is responsible for well over $500mm in transactions since its inception and maintains an average portfolio of $40mm in equity.
Although Chris, through his affiliated entities, continues to opportunistically acquire portfolios of single-family homes on behalf of institutions, Chris’ primary focus has been on value-add multifamily, value-add industrial investment product, and horizontal multifamily since 2016. Chris’ affiliated entities manage over $75mm in equity and oversee a portfolio of over $250mm in assets.
In 2021, Chris received the Phoenix Business Journal’s 40 under 40 award. The annual award program recognizes leaders in the region who are making major strides in their careers while leaving positive impacts on communities in the region. In addition, Chris and his affiliated companies have been recognized and featured by Business Insider, Fox News, People and CNBC to name a few.