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17 Colby Court
Bedford, NH
LOCATION
Bedford, NH
BUILDING SIZE
123,430 SF
YEAR ACQUIRED
2021
Our Original Vision
R.J. Kelly went under contract to acquire 17 Colby Court in Bedford, NH in early 2021. The 123,000 SF property formerly housed a Walmart and was vacant at acquisition. R.J. Kelly’s original business plan contemplated an extensive re-development of the property to reposition it from the prior retail use to accommodate a variety of potential light industrial tenants in a supply constrained southern New Hampshire market. R.J. Kelly’s underwritten all-in basis after repositioning and tenant improvement costs was projected to be significantly below replacement cost. R.J. Kelly’s underwriting assumed that we would sign a lease for the entire property a year after closing and then sell the property to an institutional investor at the end of year 2 of the investment period.
The Outcome
After closing on the property in May 2021, R.J. Kelly immediately commenced pre-development and permitting efforts to facilitate the planned repositioning, including obtaining a change of use from retail to light industrial from the Bedford Planning Board. Simultaneously, R.J. Kelly began marketing the property for lease. Five months after closing, and prior to commencing construction for the repositioning, R.J. Kelly signed a lease with Wire Belt Company of America for the entire building. The lease was an as-is deal at a rent that was 30%+ above original underwriting. Due to the as-is nature of the Wire Belt deal, the actual all-in basis to achieve stabilization was 40%+ less than the projected all-in basis from original underwriting. The Wire Belt lease included a purchase option at a set price. Wire Belt exercised the purchase option in month 17 of the investment period, resulting in returns that significantly exceeded original underwriting.
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