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Commercial Real Estate Transactions

SRS’ National Net Lease Group Announces $6 Million Sale of a Newly Developed Single-Tenant Property Occupied by Grocery Outlet in Norco, CA

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Commercial Real Estate Transaction Alert

SRS Real Estate Partners’ National Net Lease Group has announced the $6 million sale of a new construction, 18,000-square-foot, single-tenant property occupied by Grocery Outlet at 1428 Sixth Street in Norco, CA.

SRS National Net Lease Group’s Managing Principals Matthew Mousavi and Patrick Luther represented the seller, a local developer. The buyer, a family partnership, was represented by Mark Bitterlin of Trust Real Estate Services.

Grocery Outlet opened its doors in May 2020 and is situated on 1.72 acres. It is the anchor tenant to the new Norco Gateway Shopping Center. Other tenants at the center include Taco Bell and 6,000 sf of future retail shops. Other nearby retailers include Rite Aid, Stater Bros, Boot Barn, 99 Cents Store, and Dollar Tree, among others.

“On behalf of the seller/developer, we went to market on this asset as a pre-sale opportunity during the COVID-19 crisis,” said Mousavi. “We are also in escrow on the adjacent Taco Bell property as part of a break-up strategy to maximize value for our client. The cap rate on the Taco Bell is in the low 3 percent range.”

“Discount, essential needs retailers are highly sought after by investors as they provide stability even during economic uncertainty,” said Luther. “This high-quality, newly constructed property offered the buyer a 10-year corporate guaranteed lease in a dense, infill area with high barriers to entry for development.”

“Despite being in the middle of the pandemic and county-wide closures during the marketing process, we were able to generate significant offer activity and manage through the financing process,” added Mousavi. “We continue to experience strong investor demand for essential use, net lease assets, particularly for grocery stores.” 

The property has a population of more than 284,000 residents and 84,000 employees within a five-mile radius. It is also adjacent to and highly visible from the 15 freeway.

SRS’ National Net Lease Group has continued its explosive growth in the past year, and plans to continue expansion of their teams across the country throughout the remainder of 2020. SRS’ National Net Lease Group and the western region of SRS’ Investment Properties Group successfully completed more than 300 sales to date in 2020.  Of those transactions SRS’ National Net Lease Group (NNLG) has closed 223 transactions since the COVID-19 crisis began. These transactions alone are valued at more than $965 million. Additionally, the group has more than 500 individual assets under LOI or in escrow and $1.8 billion in assets currently listed for sale.

The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering San Bernardino & Riverside Counties.

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Commercial Real Estate Transactions

SRS’ National Net Lease Group Brokers $13.95 Million Sale of Ramona Plaza, a 102,546-SF Retail Center in Hemet, CA

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COMMERCIAL REAL ESTATE TRANSACTION ALERT

SRS Real Estate Partners’ National Net Lease Group (NNLG) announced today it has completed the $13.95 million sale of Ramona Plaza, a 102,546-square-foot (sf) retail center located at 1300-1480 E. Florida Avenue in Hemet, CA (a city in Riverside County).

SRS NNLG’s Winston Guest, Matthew Mousavi and Patrick Luther represented the seller, a Southern California-based investor. The buyer, a California-based private investor was represented by The Visintainer Group.

Built in 1974 and situated on 6.41 acres, Ramona Plaza was 88% occupied at the close of escrow with anchor tenants including Grocery Outlet, Planet Fitness, and Dollar Tree which all recently extended their leases. National brands such as Aaron’s, Leslie’s Poolmart, Subway, and Little Caesars Pizza, among others, are also tenants.

The property was attractive to the buyer as it was priced well below replacement cost at $137 per square foot, and featured upside potential through lease-up of the vacancies and bringing some tenants up to market rents.

“We generated over a dozen offers on this asset which is testimony that multi-tenant retail investment property in Southern California continues to garner strong interest. Investors were attracted to the well-positioned corner location of this grocery-anchored shopping center with a quality tenant line-up that offered essential service and e-commerce resistant business,” said Guest.

“Inland empire markets like Hemet are receiving renewed interest, most notably driven in part by substantial growth in the industrial and manufacturing markets in these areas, drawing investment toward the retail sector as well. Being a value-add grocery anchored center in SoCal, Ramona Plaza offered a rare investment opportunity,” added Mousavi.

Ramona Plaza is located at the highly trafficked, main and main intersection of E. Florida Avenue and N. San Jacinto Street which sees more than 57,000 vehicles passing by daily. The property benefits from significant frontage along E. Florida Avenue, the primary retail corridor for Hemet with excellent visibility and access. Over 170,000 residents and more than 29,000 employees live and work within a five-mile radius of the property.

In 2021, SRS’ Investment Properties Group and National Net Lease Group (NNLG) completed more than $3.1 billion in deal volume comprised of 899 transactions in 49 states, and currently has more than $2 billion in property on the market, with nearly 200 properties sold year-to-date in 2022.

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Commercial Real Estate Transactions

Hanley Investment Group Completes 4th Retail Property Sale at Monterey Crossing in Palm Desert, Calif.

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COMMERCIAL REAL ESTATE TRANSACTION ALERT

New construction Habit Burger Grill Drive-Thru sells for $4.57 million, representing a record-low cap rate nationwide for a single-tenant Habit Burger Grill

Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a 2021-new construction, single-tenant The Habit Burger Grill Drive-Thru at the newly developed Monterey Crossing shopping center at the Interstate 10 and Monterey Avenue interchange in Palm Desert, California. The sale price was $4.57 million. This transaction marks the fourth retail pad building Hanley Investment Group has sold at Monterey Crossing, totaling a combined 17,060 square feet and approximately $20.3 million.

Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the developer and seller, Fountainhead Development of Newport Beach, California, in all four retail transactions. John Costa, David Fults and Brian McLoughlin of Voit Retail Estate Services in Los Angeles represented the buyer of The Habit Burger Grill Drive-Thru, a private investor based in Southern California. Previous sales included two brand new, single-tenant ground leased pads to Chick-fil-A Drive-Thru and Quick Quack Car Wash, along with a two-tenant pad building occupied by AT&T and Spectrum. All four properties were sold to four separate buyers at record-low cap rates.

The single-tenant net-leased investment occupied by a new, 2,700-square-foot Habit Burger Grill is situated on 0.91 acres at 73320 Dinah Shore Drive in Palm Desert. According to Asher, “We created a competitive bidding process that helped secure a 1031 exchange buyer at 100% of the asking price,” said Asher. “The sale represented a record-low cap rate for a single-tenant Habit Burger Grill nationwide.” 

The Habit Burger Grill is known for its signature Charburgers and fast-casual dining experience, notes Asher. The menu also includes sandwiches, fresh salads, a variety of sides and more.

In March of 2020, Yum! Brands, which owns Taco Bell, KFC and Pizza Hut, finalized the purchase of the Southern California-based burger chain for around $375 million. Today, Habit Burger currently has 340 locations globally with the majority of its locations in California.

“The new Habit Burger Grill’s Palm Desert location incorporates indoor dining, patio dining and drive-thru to maximize sales,” said Asher. “The pandemic certainly shined a very bright light on the impact of having a drive-thru. Approximately 70% of quick-serve restaurant sales were generated through a drive-thru and sales were approximately 50% greater in locations that had a drive-thru. We expect to see more QSRs with drive-thrus as companies roll out their prototypes across the U.S.”

Monterey Crossing is strategically located at the signalized intersection of Monterey Avenue and Interstate 10 freeway, one of the most centrally located and heavily visited interchanges (110,000 cars per day) in the Desert Cities area of Southern California and a primary east/west arterial connecting to Los Angeles to San Bernardino County, Riverside County and Phoenix, Arizona. Monterey Avenue (37,000 cars per day) is the major north/south connector between the freeway, resorts and high-income communities of Palm Desert, Rancho Mirage and Cathedral City.

Fountainhead is currently developing additional single-tenant pads and multi-tenant buildings in the first phase of the project in addition to a second phase of the shopping center, which combined will ultimately feature 17 acres of best-in-class retail.

Monterey Crossing also benefits from freeway-visible pylon signage and is the first Palm Desert center to be approved for freeway signage, according to Asher.

National tenants located at the intersection of Monterey Avenue and Interstate 10 include Costco, Home Depot, Kohl’s, Sam’s Club, Walmart, 99 Cents Only, Ashley HomeStore, JOANN Fabrics and Crafts, PetSmart and Regal Cinemas.

Palm Desert is the geographic center of the Coachella Valley, a fast-growing region of Southern California. Within a three-mile radius of Monterey Crossing, the population increased by 53% between 2000 and 2020 and is projected to grow an additional 7.4% by 2025. The average household income is currently $106,000. There are more than 4,500 new residential units planned or under construction within a 2.5-mile radius of Monterey Crossing.

“In 2022, we anticipate developers and shopping center owners will continue to see the accretive value of implementing a break-up sale strategy to capitalize on the high demand for single-tenant and multi-tenant retail pad product at premium pricing,” said Asher.

Hanley Investment Group has sold more than $407 million in retail properties in the Inland Empire in the last 36 months.

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Commercial Real Estate Transactions

Stos Partners Acquires 139,000sf Industrial Building in Jurupa Valley, CA for $19.8 Million

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COMMERCIAL REAL ESTATE TRANSACTION ALERT

Stos Partners, one of the most active commercial real estate investment and management firms in Southern California, has acquired a 139,000 square-foot industrial asset in the Inland Empire submarket of Jurupa Valley, California from a private seller for $19.8 million.

According to CJ Stos, Principal at Stos Partners, the firm saw immense potential in the property based on the under-served demand for quality manufacturing space in the market, and quickly moved forward to negotiate a competitive purchase price.

“While much of the current development and investment activity in the Inland Empire involves Class A distribution centers, there remains a strong demand from companies that understand the value of maintaining and growing manufacturing operations in this key industrial market,” explains Stos. “Most Southern California submarkets are seeing industrial vacancy rates in the one-percent range. As one of the most active buyers of industrial product in the region, our team immediately recognized the value of adding this core asset to our growing portfolio.”

Stos notes that the firm will implement a value-add strategy at the property, which was built in 1986, to bring a competitive manufacturing asset to the market. 

“Drawing upon extensive experience in value-add renovations and market demands, our upgrades to the property will include office improvements, new paint, roof work, and repaved asphalt,” continues Stos. “Further, we recognized the potential for repositioning the ample 8.24 acres of land the property sits on, and will convert the excess land into yard space.”

Tanner Jansen, Vice President of Acquisitions at Stos Partners, adds that the firm is working closely with the City of Jurupa Valley to attract a tenant that would benefit the local business community and ensure the project is aligned with the city’s current moratorium that temporarily bans ‘truck-intensive’ projects.

“With the moratorium in mind, we met with the city of Jurupa Valley to better understand what the city envisioned for this vacant industrial asset,” says Jansen. “We ultimately developed a business plan that leverages the asset’s positioning and will help realize its full potential.”

The property is located at 10220 San Sevaine Way in Jurupa Valley, California. Stan Nowak and Cody Lerner of Avison Young represented Stos Partners as the buyer in the transaction. The seller was also represented by Nowak and Lerner along with John Pinjuv.

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