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5/17/23
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A SoCal-based private investor purchased two Chick-fil-A ground lease assets for $15 mil. The assets are located in the Southern California cities of Palm Desert and Mission Viejo. The blended closing cap rate was 3.83%, marking the lowest cap rates for Chick-fil-A-occupied properties sold year-to-date in the Western United States.
The Mission Viejo property, located at 27845 Santa Margarita Pkwy, consists of a 4.8k sf structure situated on just under one-acre. The newly developed asset has a 15-year, absolute triple net corporate guaranteed ground lease. The property is within an affluent south Orange County area with more than 47,000 housing units within a three-mile radius. Jimmy Slusher, Eric Shain and John Read of CBRE represented the seller, a local private investor.
The 4.7k sf Palm Desert property is located at 73070 Dinah Shore Drive. It is situated on 1.63 acres and was developed last year. There is a 15-year absolute triple net absolute triple net ground lease in place. The property is within the new Monterey Crossing Shopping Center and is adjacent to the I-10 Freeway. Timothy Genske of CBRE and Bruce Bailey of The Bailey Group represented the seller, UCLA who had received the asset as a donation.
SRS Real Estate Partners’ National Net Lease Group’s Matthew Mousavi and Patrick Luther represented the private buyer in the transaction.
“Chick-fil-A-occupied assets continue to be highly coveted and sought after by net lease investors as a leading brand within the quick-service-restaurant sector. We continue to transact this credit throughout the country in the 3% to 4% cap rate range, showing the resiliency of this product type and this segment of the buyer pool despite overall market cap rate movements,” said Mousavi. “Our SRS team successfully brought the buyer to these properties as part of a larger requirement placed on its behalf. The long-term intrinsic value of these Southern California sites combined with zero landlord responsibilities will provide a passive investment with scheduled rent escalations.”
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