6962 Edgewater Drive Orlando, FL
Location
Orlando, FL
Size
30,411 SF
Status
Sold
Deal Type
Light Industrial
Description
Acquisition - In February 2024, Southpaw Capital acquired 30,411 square feet of small-bay industrial space in Orlando, Florida at a price of $130 per square foot—a basis well below replacement cost.
The property consisted of eleven industrial units ranging from 1,575 to 4,800 square feet, each featuring a small office component and a private bathroom.
Although fully leased at acquisition, the property operated under short-term gross leases, which presented challenges in securing traditional financing. To overcome this, Southpaw Capital structured a creative solution by negotiating seller financing for the purchase.
Execution - With favorable debt terms and strong market fundamentals, Southpaw Capital recognized an opportunity to mark-to-market existing leases and/or replace the current tenant roster with higher-quality occupants. All new leases were structured as 3–5 year NNN agreements, with in-house lease renewals providing Southpaw Capital with an operational edge and cost efficiencies.
As part of the original underwriting, Southpaw Capital planned targeted capital expenditures to support its value-add strategy and enhance the leaseability of the units. These improvements included but were not limited to: roof repairs/replacement, new signage, exterior repainting, parking lot striping, updated bathroom fixtures, and office enhancements.
During the hold period, Southpaw Capital successfully increased net operating income (NOI) from $157,536 at acquisition to $404,451 at exit.
Exit - Prior to acquisition, Southpaw Capital identified this asset as a short-term hold, designed to validate the investment thesis and demonstrate the ability to bring the strategy full circle—even amidst turbulent macroeconomic conditions.
In just 18 months, Southpaw Capital successfully sold the asset for approximately 30% above its acquisition basis, delivering a ~25% IRR to limited partners, a stabilized cash-on-cash return of 14%, and a 2.4x equity multiple. Thesis proven.
