Top Shelf Greeley

The Challenge

In June of 2019, JS Western (“JSW”) aimed to capitalize on an off-market opportunity by acquiring a 47,245 square foot industrial property in Greeley, CO, for $5.275 million. At $118/sf, the acquisition was well below replacement cost. The property, operated by Top Shelf Printers, was strategically located at a high-traffic intersection with over 32,000 cars passing daily. The challenge was to assess the strength of Top Shelf’s printing business and creatively structure the deal to ensure investors were adequately compensated for their risk. Acquiring the asset 9 months prior to the beginning of the pandemic tested our underwriting skills.

The Solution

JSW structured a sale-leaseback with Top Shelf, who owned the property. Top Shelf would thereby sell the asset to JSW, becoming the tenant on a long-term lease and JSW would become the landlord.

To mitigate the risk, JSW required that Top Shelf invest a substantial amount of its proceeds from the sale as an LP into the new, acquiring entity. Further, JSW executed a 10 year NNN lease with Top Shelf at an initial below-market rate of $8.55/sf NNN, growing to $10.00/sf NNN within 18 months. As the pandemic took hold, Top Shelf leveraged their client base and sold them customized masks, which proved to be extremely profitable.

The Result

In July 2021, after holding the property for just over two years, JS Western successfully sold the property for $8.716 million. This sale achieved a 2.34x* Multiple on Invested Capital (MOIC) and an impressive Internal Rate of Return (IRR) of 50.5%*. The rapid appreciation and favorable lease terms underscored the property’s value and the tenant’s reliability, driven by Top Shelf’s 74.5% gross sales increase over three years.

*MOIC = Multiple on Invested Equity. Un-audited. Prior performance is not indicative of future results. Potential investors should consult a professional prior to investing. Case Study is a representative transaction and is not indicative of the results of the aggregate portfolio. Scott Tiano served as sole or co general partner and was involved in varying capacities.