ILS Capital Equity Fund Class B
Mainland Crossing, Texas City, TX
Introduction
Mainland Crossing is our largest multi-tenant property acquisition yet at 129,000+/- square feet and the largest dollar investment we’ve made with investor capital so far. The family-oriented entertainment and lifestyle destination sits on an expansive 19.56 acre parcel with ample paved parking.
This property meets and exceeds our rigorous buy box criteria, including a great occupancy rate with a mix of tenants that minimizes reliance on true retail.
The attractiveness of this acquisition also hinges upon the strong future growth projections for the surrounding areas:
Texas City has experienced a 3.5% population increase since 2010 with strong growth projections continuing through 2027
The city hosts over 4,000 manufacturing and petrochemical jobs, with a diverse range of other professions
There’s a sprawling 2,033-acre master planned residential community within 2 miles of this property
Galveston County has grown over 15% between 2010 and 2017 with positive growth in 12 out of the last 12 years
The property is located within the densely-populated Houston major metro
Current daily traffic for this site is over 40,000 vehicles
Investment Strategy
Mainland Crossing is located very close to ILS Legacy CEO, Tom Berry and his wife Melissa’s primary residence. Mr. and Mrs. Berry have been involved in real estate investing in Galveston County for many years and have established a network of reliable resources that will be advantageous for ongoing maintenance of the Mainland Crossing property.
Another major opportunity of owning this property is the potential for updating the leases. Many of the current leases will be up for renewal within the hold period and present the potential of transitioning to more favorable terms for the tenants- as well as investors. Updated leases will ultimately position the property for a strong sale.
The large land parcel has the potential to accommodate the lease or development of some smaller lots. As we’ve seen with our other ILS Equity Fund Investments, this tactic can substantially increase the total proceeds for investors over the asset hold period.
Financial Highlights
Price: $15,375,000
Price Per Square Foot Average: $118.56+/-
Current Net Operating Income: >$1,552,855
Cap Rate: 10.100%
Investor Partner Capital: $4,725,000
ILS Capital Investment: $525,000*
*ILS Capital invests our own money alongside our Investor Partners.
Estimated Hold Period: 5 Years
Target Rate of Return to Investors: 20-23% Annualized Over the Project Hold Period
Total Projected Investment Partner Return Upon Sale: 112.643%
Projected Annualized Non-Compounded Return: 22.529%
Acquisition
Purchase Price on 5/31/24: $15,375,000
Bank Note 70% of Purchase Price at 8% Fixed Interest for 7 Years, 30 Year Amortization
Seller Contribution of $183,500 towards new roofs and gutters
Set Aside Initial Capital Expenditures: $414,563
Summary Conclusion
Mainland Crossing in Texas City, TX has the potential to perform very well for our Equity Fund Class B investors. As we’ve seen with our other equity acquisitions, the development of outlot parcels from available acreage and transitioning tenants to better lease terms can improve an asset like this for a very strong exit.
While this property is our largest acquisition to date, its major-metro location and growth projections indicate another phenomenal success for ILS Capital and our investors.
For more information about this property or our other ILS Capital Funds, please call us at 979-541-1280 or email: invest@ils.cash
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