UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 10, 2003
CORNERSTONE REALTY FUND, LLC
(Exact name of registrant as specified in its charter)
California | | 333-107750 | | 33-0827161 |
(State or Other Jurisdiction of
Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification
Number) |
|
4590 MacArthur Blvd., Suite 610
Newport Beach, California 92660 |
(Address of principal executive offices) |
|
(949) 852-1007 |
(Registrant’s telephone number, including area code) |
|
Not Applicable |
(Former name or former address, if changed since last report) |
Item 2. Acquisition or Disposition of Assets
Arrow Business Park, Irwindale, California
On December 10, 2003, we purchased an existing multi-tenant industrial business park known as the Arrow Business Center, a single-story three building property built in 1987 of approximately 69,592 square feet of leasable space on approximately 5.04 acres of land. The acquisition price was $5,871,537 including $201,537 of closing costs, which equates to approximately $84 per square foot of leasable space. The property is currently 98.4% leased to forty tenants whose spaces range in size from approximately 800 square feet to over 4,800 square feet. Currently, there is one 1,120 square foot vacant space. We expect to purchase this property for all cash, without debt financing.
The property��s historical occupancy rates are as follows:
Year Ending
December 31 | | Average Annual
Occupancy (%) | |
| | | |
2000(1) | | 91 | % |
2001 | | 94 | % |
2002 | | 95 | % |
2003(1) | | 97 | % |
(1) reflects partial year data
The following table sets forth certain information with respect to the property’s existing leases at the date of acquisition:
Total Square
Feet Leased | | Expiration
Date | | Renewal
Options | | Current
Annual
Rent ($) | | Base rent
per sq.ft.
per annum ($) | |
| | | | | | | | | |
2,240 | | Dec-03 | | — | | 17,203 | | 7.67 | |
800 | | Apr-04 | | — | | 6,870 | | 8.59 | |
800 | | Mar-05 | | — | | 6,720 | | 8.40 | |
1,120 | | Dec-04 | | — | | 8,602 | | 7.68 | |
800 | | Mar-04 | | — | | 6,824 | | 8.53 | |
1,120 | | Jul-05 | | — | | 8,736 | | 7.80 | |
1,120 | | Jul-05 | | — | | 8,856 | | 7.91 | |
800 | | Sept-05 | | — | | 6,720 | | 8.40 | |
800 | | Jun-04 | | — | | 6,144 | | 7.68 | |
1,600 | | Mar-04 | | — | | 13,074 | | 8.17 | |
1,120 | | Jun-04 | | — | | 9,408 | | 8.40 | |
2,720 | | Mar-05 | | — | | 20,094 | | 7.39 | |
800 | | Jun-06 | | — | | 6,528 | | 8.16 | |
1,120 | | Aug-05 | | — | | 8,870 | | 7.92 | |
1,120 | | Jul-05 | | — | | 7,392 | | 6.60 | |
800 | | Nov-05 | | — | | 6,720 | | 8.40 | |
1,120 | | Mar-05 | | — | | 8,870 | | 7.92 | |
800 | | Mar-05 | | — | | 6,720 | | 8.40 | |
800 | | Apr-05 | | — | | 6,720 | | 8.40 | |
1,120 | | Apr-05 | | — | | 8,602 | | 7.68 | |
F-2
Total Square
Feet Leased | | Expiration
Date | | Renewal
Options | | Current
Annual
Rent ($) | | Base rent
per sq.ft.
per annum ($) | |
| | | | | | | | | |
1,120 | | May-04 | | — | | 8,602 | | 7.68 | |
800 | | Jun-05 | | — | | 6,528 | | 8.16 | |
1,120 | | Jul-05 | | — | | 8,602 | | 7.68 | |
800 | | Sep-04 | | — | | 6,912 | | 8.64 | |
1,120 | | Aug-05 | | — | | 8,870 | | 7.92 | |
2,160 | | May-04 | | — | | 22,032 | | 10.20 | |
1,082 | | Mar-04 | | — | | 10,744 | | 9.93 | |
966 | | Jun-04 | | — | | 11,284 | | 11.68 | |
2,078 | | Aug-04 | | — | | 21,037 | | 10.12 | |
2,078 | | Jun-04 | | — | | 19,637 | | 9.45 | |
2,160 | | Jun-06 | | — | | 26,676 | | 12.35 | |
4,096 | | Feb-04 | | — | | 39,489 | | 9.64 | |
2,172 | | Nov-04 | | — | | 22,154 | | 10.20 | |
3,200 | | Jan-05 | | — | | 25,560 | | 7.99 | |
3,200 | | Jul-04 | | — | | 28,416 | | 8.88 | |
3,200 | | Aug-04 | | — | | 27,412 | | 8.57 | |
3,200 | | Jun-04 | | — | | 25,335 | | 7.92 | |
3,200 | | Nov-04 | | — | | 25,344 | | 7.92 | |
4,800 | | Dec-05 | | — | | 37,440 | | 7.80 | |
3,200 | | Aug-06 | | — | | 25,344 | | 7.92 | |
1,120 | | | | — | | | | | |
No tenant occupies more than 7% of the rentable square footage. These tenants operate varying business, including light manufacturing and distribution, light assembly and warehousing that encompasses a wide variety of businesses.
The following table sets forth lease expiration information for the next ten years:
Year Ending
Dec. 31 | | No. of
Leases
Expiring | | Approx.
Amount of
Expiring Leases
(Sq. Feet) | | Base Rent
Of Expiring
Leases
(Annual $) | | Percent of
Total Leasable
Area Expiring
(%) | | Percent of
Total
Annual Base
Rent Expiring
(%) | |
| | | | | | | | | | | |
2003 | | 1 | | 2,240 | | 17,203 | | 3.21 | % | 2.93 | % |
2004 | | 19 | | 35,592 | | 319,320 | | 51.15 | % | 54.39 | % |
2005 | | 17 | | 24,480 | | 192,020 | | 35.18 | % | 32.70 | % |
2006 | | 3 | | 6,160 | | 58,548 | | 8.86 | % | 9.98 | % |
2007 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
2008 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
2009 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
2010 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
2011 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
2012 | | 0 | | 0 | | 0 | | 0.00 | % | 0.00 | % |
F-3
For federal income tax purposes, the depreciable basis of the property is estimated to be $3,495,489. The depreciation expense will be calculated using the straight-line method, based upon an estimated useful life of 39 years for the building improvement costs and the related lease term for the tenant improvements. Leasing commissions will be amortized over the initial term of the related leases.
Item 7. Financial Statements and Exhibits
The required financial statements will be filed by an amendment to this Current Report on Form 8-K no later than 60 days after December 25, 2003.
F-4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CORNERSTONE REALTY FUND, LLC |
| |
| By: | CORNERSTONE INDUSTRIAL PROPERTIES, LLC |
| | Its Managing Member |
| |
| By: | CORNERSTONE VENTURES, INC. |
| Its Manager |
|
| By: | /S/ TERRY G. ROUSSEL | |
| Terry G. Roussel, President |
|
Dated: December 18, 2003 |
| | | | | | | | | |
F-5
