Retail Archives - Lee & Associates

Record Single Tenant NNN Sale Price PSF on Development Presale

pmurphy — Fri, 15 Oct 2021 17:09:30 +0000

The Client

Platinum Energy is a privately-owned company based in Agoura Hills, CA. Platinum’s Founder and CEO, David Delrahim emigrated from Iran in 1979 with a dream of success and helping others succeed. Founded in 1983 with one sole gas station, Platinum Energy is the owner/operator of more than 200 car washes and gas stations throughout the West Coast. Platinum is a pioneer in employee development, retention and diversity being the first in the industry to provide full health and retirement saving benefits to all employees.

The Challenge

Former Union 76 gas station site; main entrance pad to Serramonte Center (major regional power center, premium Bay Area Peninsula location). Subject property was the only pad not owned by the REIT that owns Serramonte Center; REIT offered to purchase the subject property for $5M ($221/PSF – land value). While the subject property was “clean” from an environmental standpoint (owner was in possession of a “No Further Action Letter” and “Tank Closure Letter”), the fact that the prior use was a gas station presented environmental challenges to be addressed no matter how the site was redeveloped and to whom it was leased or sold.

Our Approach

Advised client to find a tenant and determine if ground lease or build to suit option would maximize disposition value versus an outright land sale. Fully negotiated Verizon Wireless corporate lease on behalf of the client, including overcoming significant environmental, construction/delivery, over-market rent, and city-related issues. Provided fee development oversight to ensure entitlement, building department, and construction matters were in sync with tenant’s timing/expectations. Marketed the property for sale prior to construction being complete and tenant accepting delivery of the premises (creative marketing and deal structure).

The Outcome

Delivered brand new corporate Verizon Wireless NNN 10-Year Lease, 4,500 square foot, newly constructed build to suit, net operating income of $528,510 ($9.79/PSF). Total costs for construction, leasing commissions, tenant improvements, etc. (approximately $2M). Sold to Bay Area based, 1031 exchange buyer with local outside broker representation for $10,050,000 (5.25% cap; $2,233/PSF). The price per square foot set a national record for a stand-alone single tenant NNN leased retail investment. Net sale proceeds to the client was over $8,500,000 after construction costs vs. the original $5M “as-is” sale to the REIT that owns Serramonte Center- a $3.5M delta, or 70% in additional value generated.

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Historic Adaptive Reuse: Industrial Facilities Turned Mixed-Use, Multifamily Housing, and Retail

pmurphy — Tue, 18 Aug 2020 21:10:12 +0000

The Client

CEDARst applies a vertically integrated approach to the development of residential assets throughout the U.S. CEDARst was a pioneer in micro-unit multifamily development in Chicago, identifying an un-met demand for high quality apartments at an approachable price point. CEDARst markets its entire portfolio under a single brand: FLATS®. All FLATS® properties deliver a consistent resident experience, complete with thoughtfully designed, hospitality-driven, and community-oriented spaces, setting it apart from the competition.

The Challenge

The 6th & 3rd project is the second North Loop/Warehouse District (Minneapolis, MN) transaction in nine months for our client, CEDARst Companies ("CEDAR"), a prominent multi-family developer based in Chicago, Illinois. The 6th & 3rd properties are located one block from CEDAR's first project, "The Duffey Lofts" site which land acquisition closed in July 2019, providing an excellent opportunity for CEDAR to scale its operation in the Twin Cities by more than 3.0x. The acquisition of the 6th & 3rd properties did not occur without headwinds. Primarily, the spread of COVID-19 into the US in February/March of 2020 and the economic shutdown and recession that ensued, posed a major challenge to the transaction. As a result of COVID-19, lenders across the nation turned off the spigot for making new loan commercial real estate loans. Additionally, private and institutional equity sources were rattled creating a "cash-is-king" mindset, not knowing if, and how long, an economic decline would last.

Our Approach

Lee & Associates provided ongoing brokerage and transactional support to CEDAR in a variety of ways. The Team was successful in raising equity capital and relational support to multiple local/regional lenders who, through the Team's local market knowledge and expertise, were still actively pursuing new loan financings despite the economic disruption caused by COVID-19. Due to state-to-state travel bans leading up to closing the 6th & 3rd, it proved critical to have local boots on the ground to allow for social-distanced contact with the seller, City and neighborhood leaders, investors, third parties conducting due diligence, and other points of contact necessary as part of the transaction.

The Outcome

A testament to a well-built transactional team in CEDAR and their ability to execute during a time of increasing COVID-19 cases in Minnesota, in concert with the local knowledge and transactional expertise provided by both members of the Lee & Associates Twin Cities office, the land acquisition of the 6th & 3rd assets closed in April 2020. Since closing, the Lee Team has been hired by CEDAR to lease the Office component of the 6th & 3rd project, which has proven to produce strong leasing activity in the early stages of redevelopment.

608 3rd Street North: The proposed completed project will include ± 16,328 square feet of commercial space, 258 dwelling units and 34 vehicle parking stalls.
300 6th Avenue North: The proposed completed project will include ± 30,932 square feet of commercial space and 69 dwelling units.
246 7th Avenue North: (New construction on a vacant lot) - The proposed new building will include ± 18,646 square feet of commercial space, 24 dwelling units and 291 vehicle parking stalls in a new, single, rectangular, four story building.

The post Historic Adaptive Reuse: Industrial Facilities Turned Mixed-Use, Multifamily Housing, and Retail appeared first on Lee & Associates.

Medical Practice Relocation Yields an Income-Producing Asset in Cincinnati, Ohio

pmurphy — Sat, 22 Feb 2020 06:20:52 +0000

The Challenge

The two-story retail space was physically and financially distressed and required exterior and interior renovation. While the total building's net rentable area is 21,965 square feet, at the time of acquisition 15,019 square feet was either vacant or rested at below market rates. Existing layout did not have enough contiguous space for Montgomery Family Medicine, although the total property size was four times what the practice anticipated purchasing. A recently constructed traffic median impacted north bound Montgomery Rd. access, making retail trade more difficult.

Our Approach

Dan McDonald found multiple locations that would be suitable for their practice. However, the expense of a single-occupant building did not yield the desired financial returns. Mr. McDonald suggested a high-visibility, multi-tenanted property that could meet the needs of the practice and create positive investment value for the physicians and their partners. Lee & Associates brought in additional equity investment partners to help the client secure a loan of $2.7 million. Coordinated more than $1 million in total exterior and interior renovations. Found new locations and negotiated leases for existing tenants who needed to be relocated. Negotiated four new leases and extended two existing leases to reach 100% occupancy within nine months of the purchase.

The Outcome

Instead of purchasing an owner-user facility, Montgomery Family Medicine acquired an income-producing asset and occupied the anchor position. By anchoring the property, Montgomery Family Medicine enjoys premium space while their tenants’ leases service the mortgage and pay a portion of the property’s operating expenses. When Montgomery Family Medicine re-opened for business they immediately realized positive cash flow from tenant leases. The asset was thoroughly renovated and exceeded lease projections in the most difficult real estate market in 75 years. By the end of the first year the property had a leveraged return to each investor of approximately 21.5%.

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Retail Archives - Lee & Associates

Record Single Tenant NNN Sale Price PSF on Development Presale

OVERVIEW

The Client

The Challenge

Our Approach

The Outcome

Historic Adaptive Reuse: Industrial Facilities Turned Mixed-Use, Multifamily Housing, and Retail

OVERVIEW

The Client

The Challenge

Our Approach

The Outcome

Medical Practice Relocation Yields an Income-Producing Asset in Cincinnati, Ohio

OVERVIEW

The Client

The Challenge

Our Approach

The Outcome