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INLAND EMPIRE NEWS
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SoCal Single-Tenant Retail Properties Trade in Deals Worth over $30 Mil

6/17/20

We’ve learned of four SoCal, single-tenant retail properties that traded in recent deals totaling $31 mil. The properties are located in Indio, Lomita, Victorville and Hawthorne. NKF’s Bill Bauman, Kyle Miller, Michael Fogel and Matt Schwartz were involved in brokering all of the deals.

“Single-tenant retail assets with solid credit, an operating history, favorable lease terms and quality real estate fundamentals remain in high demand, amid volatile capital markets due to the COVID-19 pandemic,” said Bauman. “We are seeing 1031-exchange investors very active in the market and pleased with the IRS’ decision to provide relief/extensions on 1031 timelines.”

Miller added, “Essential retail tenants, such as grocers and drugstores, continue to be highly sought after by investors, especially those who have experienced a significant increase in sales as of late.”

The Indio property, occupied by CVS, is located at 42150 Jackson St. It sold for $3.9 mil in an all-cash transaction at a 5.1% cap rate. The seller was a private Orange County-based investor / developer and the buyer was a private investor.

In Lomita, a McDonalds-occupied property located at 1712 Pacific Coast Highway sold for $2.4 mil in an all-cash transaction at a 2.77% cap rate. The seller was a private family trust. The buyer, McDonalds, exercised its right of first refusal after the NKF team was able to generate multiple highly competitive offers.

The third property, which sold for $9.9 mil at a 5.85% cap rate, is located at 14528 Palmdale Rd in Victorville and is occupied by Cardenas, one of the leading Hispanic grocers in Southern California. The NKF team advised the seller, a private Orange County-based developer. Ed Barkett of Atlas Properties repped the buyer, a private, 1031-exchange investor.

The fourth property, located at 14351 Hindry Avenue in Hawthorne, is occupied by Bed, Bath & Beyond. It sold for $14 mil. The seller was Hawthorne Gateway LP, a private Los Angeles-based partnership, and the 1031-exchange buyer was a private, family office. The NKF team, along with Michael Grannis of Highland Partners, advised the seller, who has owned the property for nearly 18 years. NKF helped to implement a break-up strategy that included a simultaneous pay-off and recapitalization of the existing loan to free up the Bed Bath & Beyond parcel at close of escrow.

According to NKF Research, private buyers drove acquisitions in recent years, a trend that will persist in 2020. Many of these buyers are high-net-worth individuals in search of yields that exceed the Treasury. COVID-19’s effects on global stock markets, which are highly volatile in the current environment, also enhance the appeal and security of net-leased investments as property owners receive the benefits of an income stream from a tenant and the underlying value of the asset.






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