200 Rutlege Avenue is a unique investment opportunity that combines an investment-grade tenant with upside income potential. The first floor tenant is an investment-grade credit tenant and was recently listed as a member of the Dow Jones Industrial Average. The tenant signed a 10-year lease and is in the process of building out a specialty pharmacy. The second floor contains two, 2-bed/2-bath, residential units. Both residences were recently renovated and are both are leased in the short term rental market.
The building is located within the City of Charleston Accomodations Overlay District which allows for the operation of AirBnB and VRBO units. The local neighborhood— Elliottborough/Cannonborough—is one of Charleston’s most dynamic districts and is a top AirBnB reservation location. The property is located between the MUSC/Roper medical district and the College of Charleston. The blocks surrounding 200 Rutledge are home to dozens of restaurants including the former Hominy Grill, Fuel, Xiao Bao Biscuit, Goulette, and Chez Nous.
The anchor tenant signed a 10-year lease for the first floor of 200 Rutledge Avenue in April 2018, with the rent and 10-year term commencing November 2018. Tenant is currently under construction, renovating the first floor space to create a modern, class ‘A’ specialty pharmacy. Tenant is responsible for the cost and management of the permitting and construction. The base rent is $28/s.f. NET, with a 10% escalation at the beginning of year 6. Tenant is responsible for utilities, and its share of insurance, taxes and CAM charges.
Seller recently completed renovating the residential units for conversion to short term rental. High standard furnishings and decor are consistent with competing short term rentals in the area. Income projections are derived from projections prepared by a leading short term rental manager based on surrounding comps. Additionally, the NOI is net of all required management fees. This is a great opportunity for a hands off investor or a more active short term accommodations manager.
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