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4/03/20
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A private investor paid $4.025 mil for the ground lease purchase of a freestanding drive-thru equipped McDonald’s in Fountain Valley. The all-cash buyer made the acquisition as part of a 1031 exchange transaction.
The 3.5k sf property is located at 11321 Talbert Ave, near the signalized, hard corner intersection of Talbert and Newhope St. The McDonald’s has a corporate-guaranteed, triple net lease in place with 12 years remaining.
McDonald’s is positioned as an outparcel to a Costco-anchored shopping center, with national/credit tenants including Ross Dress for Less, Petsmart, Starbucks, Taco Bell, and more. This mix produces significant crossover shopping within the center. The property features a drive-thru, considered a stronger feature for customers.
Michael Walseth with SRS’ National Net Lease Group represented the seller, a SoCal-based investor. Chris Nikchevich of TNG Real Estate Services repped the buyer in the deal, which came in at a a 3.23 % cap rate, a number we’re told is a national record-breaking cap rate according to CoStar (for trailing two- year lease term, two to 20 years).
“This sale demonstrates the investor’s ‘flight to quality’ and growing divergence between stabilized investment-grade credit tenants and non-core properties. Even now, as everyone is reacting to the impacts of the coronavirus crisis, we find that the investment strength of real estate assets, especially those deemed essential, remain viable and are being sought out,” said Walseth. According to Walseth, a 21-day escrow, due diligence, and closing was all completed during the COVID-19 safer at home practices.
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