Mallios Realty purchased this property located at 3109 Georgia Avenue NW in the Petworth neighborhood in 2018. Georgia Avenue is a major commuter route in and out of Washington and Petworth is an up and coming neighborhood. The site is between Irving and Kenyon Streets, about half a mile from the Columbia Heights Metro Station and about three quarters of a mile from the Petworth station. The Property is a 4,300 square foot three story commercial building that was owner occupied and delivered vacant. The asking price was $1.3 million but we acquired the property for $950,000. That price is equal to $221 per square foot. We leased the entire building to one tenant prior to closing. The building could be leased in the future as retail or office and is currently divided by floor, so it could be leased to three separate tenants. The second and third floors were in good condition when we purchased the building, and we renovated the ground floor to a vanilla shell.
The Property is strategically positioned at the southern end of Petworth and on the east edge of Columbia Heights. There are a variety of retail, medical and commercial tenants nearby. The residential base in the neighborhood is very dense and seeing an influx of young professionals and millennial's. The immediate neighborhood is dominated by residential buildings and street level retail. The residential base is growing so we see appreciation in rental values over the coming years, which will result in strong appreciation of property values.
The Local Market. The Petworth neighborhood has seen steady appreciation over the recent years. This pattern is expected to continue as areas to the east of Petworth continue to gentrify. Residential and commercial rents are expected to rise as pricing in the neighborhood is lower than other parts of Washington, resulting in anticipated rapid appreciation of the property. The convenience to downtown and nearby amenities attract local residents.
Acquisition and Financing. We acquired the property with a conventional loan. We will continue to bring investors into the company until we completely pay down the loan.
Return on Investment. Mallios Realty is offering shares in the company for $50,000 per unit. Initial Annualized Cash on Cash Return based upon the current property and lease is 9.94% in year one, with an 8 year average of 11.04%. This may change as additional properties are acquired. Based upon the expected increase in the 8th year rent, the investment will be worth three times the purchase price with an IRR of 17.96%. Distributions are made quarterly. For additional information please contact Peter Mallios.
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