Investing Case Studies with high return

Property Case Studies

The following six case studies are intended to demonstrate the opportunity for exceptional returns generated by the MGC model of real estate investment. It should be noted that they occurred during a robust real estate cycle in the period between 1992-2005, and are not necessarily indicative of returns to be achieved during the next 5-10 years. They are mentioned here to illustrate and emphasize the fundamental importance of buying selectively and of riding the cycle upward.

Transaction Summary

In March 1992, MGC acquired this 320 acre property.

The prior developer had spent close to $20,000,000 to acquire, plan and engineer it.

Opportunity

MGC paid $5,000 per acre ($1,600,000), with $650,000 cash down and a $950,000 carryback payable over five years.

Value Added by Management

After waiting 1 1/2 year for the market to recover MGC negotiated sale of 76 acres to a local School District for $15,000 per acre ($1,140,000) which paid off the carryback debt.



Two years later 230 acres was sold to a national homebuilder for $26,087 per acre ($6,000,000) in a five-stage option structured to allow the homebuilder to book much of its investment off-balance sheet.

In addition, MGC negotiated a provision requiring the homebuilder to pay an additional 1% of the sales price for each finished house payable upon home sale, resulting in an additional $1,000,000 of profit.

In July 2003, the remaining 14 acres was sold for $87,126 per acre ($1,255,000).

Investment Result

Total net sale proceeds of $8,523,035 provided IRR (annualized) on partner equity of 40.9% and a total return of 753.14%.

Transaction Summary

This property had an approved Tentative Tract Map (TTM) for 292 lots in place when purchased October 2003.

The Seller had previously entered into a one-year option to purchase it when the Buyer decided not to close shortly before expiration of the option term. MGC acted promptly and acquired the option with only five days remaining before the scheduled closing, and was able to complete due diligence and timely close for a cash purchase price of $2,317,500.

Opportunity

MGC knew the purchase price was substantially less than market value. The property was enhanced by its proximity to both the an existing Master Planned Community and other housing already underway in the area.





Value Added by Management

The property was positioned for sale to a homebuilder immediately following purchase.

It sold July 2005, for $34,000 per lot ($9,928,000).

In addition, MGC negotiated a provision requiring the homebuilder to pay an additional 1% of the sales price for each finished house payable upon home sale, resulting in an additional $1,000,000 of profit.

Investment Result

IRR (annualized) on partner equity was 98.29% and total return 304%.

Transaction Summary

In May 2000, MGC purchased this 167 acre property consisting of 84 acres having a Final Map (FM) in place (67 partially developed and 67 undeveloped 1/2 acre lots) and 83 acres of raw land, for $585,000 cash.

Opportunity

This property was partially developed by the prior developer at a cost of several million dollars.

The owner lost the site through foreclosure.

Value Added by Management

The City of Hesperia attempted to rescind the FM, however, MGC was able to forestall that action by completing various repairs and maintenance of the existing improvements while awaiting a stronger market for the area.

Investment Result

The property sold March 2005, for $5,750,000.

IRR (annualized) on partner equity was 37.57% and total return was 589.4%.

Transaction Summary

In August 2003, MGC acquired this 17.67 acre freeway interchange property for $2.42 per sf ($1,862,500).

It paid $558,750 cash down and the seller carried back $1,303,750.

Opportunity

The purchase price for this property with a major on/off ramp on one of California's busiest freeways in place was considered a bargain, especially given the Seller's willingness to provide carry-back financing for 70% of the purchase price.

Value Added by Management

MGC worked through various hydrology, drainage and zoning issues with its engineers and Town of Perris staff in order to address and resolve development issues.

Investment Result

The property sold October 2004, for $6.00 per sf ($4,487,551).

IRR (annualized) on partner equity was 136.81% and total return was 219.74%.

Transaction Summary

MGC purchased this 9.27 acre commercial corner for $2.14 per sf ($862,500) January 2004.

Opportunity

The property is situated at a major intersection with a heavy traffic count.

The purchase price was negotiated at well below market value for such a key retail site in part due to concern over potential street widening by CalTrans.

Value Added by Management

MGC addressed and resolved significant highway right-of-way issues with both the Town of San Jacinto and CalTrans. In the process it created additional depth and useable area allowing sale to large-pad retail users.

Investment Result

The property sold April 29, 2005, for $6.50 per sf ($2,624,708).

IRR (annualized) on partner equity was 119.17% and total return was 301.79%.

Transaction Summary

MGC purchased this 22 acre tract in August 2003, for cash at $0.58 per sf ($563,250).

Opportunity

The property is adjacent to a large Master Planned Community in an area experiencing rapid residential growth generating increasing demand for commercial uses.

The purchase price negotiated was well-below current market value.

Value Added by Management

To maximize return on investment, patience was required as additional rooftops were necessary to create increased retail demand.

In the interim, hydrology and road alignment issues were identified and resolved in order to position the property for maximum sales price.

Investment Result

The property sold August 2005, for $3.50 per sf ($3,380,521).

IRR (annualized) on partner equity was 137.39% and total return was 398.5%.

Disclaimer: Property case study results may not be typical and could vary due to economic conditions.

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