Setting Record Cap Rates including 4.95%
IRVINE, CA – January 30, 2013 – (RealEstateRama) — Hanley Investment Group Real Estate Advisors, one of the most dominant retail investment groups in the western United States and a market leader in the sale of retail properties, announced today Jonathan T. Selznick represented buyers and sellers in the sales of three retail centers in southern California totaling over 9,000 square feet and in excess of $4.4 million dollars.
The first property, Santa Ana Square, is a 3,285-square-foot retail center located on 0.33 acres at 1268 Grand Avenue in Santa Ana, Calif. The purchase price was $1,550,000, which represented a 6.86% capitalization rate. Santa Ana Square was 100% occupied at the time of sale and features two tenants, GameStop and Waba Grill. The buyer, a private investor based in southern California, was represented by Jonathan Selznick, vice president of Hanley Investment Group. The seller, a private investor based in southern California, was represented by Robin Lombardo of Coliseum Commercial in Sherman Oaks, Calif.
“This was the up leg in a 1031 exchange for the buyer,” said Selznick. “Due to our wide relationship base in the marketplace, we were able to locate an off market shopping center investment and obtain an approximately 100 basis points favorable spread in the cap rate compared to the property that the buyer sold, significantly improving the asset/location quality, and reducing the downside risk in any future rental replacement. This is an example of the strategic advisory services Hanley Investment Group offers our clients.”
The second property is a 3,890-square-foot retail center located on 0.43 acres at 123-201 W. 17th Street and 122 W. 18th Street in Santa Ana, Calif. Built in 1976, the property was 100% occupied at the time of sale and features two tenants, Baskin Robbins and CareMore. The purchase price was $1,850,000, which represented a 5.71% capitalization rate. The buyer was a private investor. The seller, a private investor based in southern California, was represented by Selznick.
“We were able to help a private family trust prepare the property for sale by aiding and finalizing the lease with CareMore,” said Selznick. “Furthermore, we sourced a local private buyer that was in a 1033 exchange who paid a 5.71% cap for a midblock unanchored retail strip center in Santa Ana – if it is not a record for this asset type in recent years, it is certainly close to it.”
Selznick continued, “It is clear that for well-located and fundamentally sound multi-tenant retail investments, cap rates can be extremely aggressive in this supply constrained, high demand, low interest rate environment. Investors looking for a return that is 50-100 basis points better than most single-tenant retail investments are turning toward smaller, multi-tenant retail investments as close substitutes. There just aren’t enough clean, single-tenant NNN investments on the market in Southern California to meet demand — so investors are looking for close substitutes.”
The third property, a single-tenant Wienerschnitzel, is located at 1820 S. Euclid Avenue in Ontario, Calif. Built in 1978 on 0.45 acres, the property is 1,835 square feet. The purchase price was $1,010,000, which represented a 4.95% capitalization rate. The buyer and seller were private investors and were represented by Selznick.
“The 4.95% cap rate achieved for the Wienerschnitzel in Ontario is one of the lowest cap rates in recent years for Southern California and a record low cap rate for a Wienerschnitzel in the Southern California, since at least 2006,” Selznick said.
“Wienerschnitzel has been successfully operating in this location since 1979, and the combination of the long-term occupancy of this credit tenant and its prominent Euclid Avenue location fronting a 100% leased Cardenas Market-anchored shopping center made this absolute NNN single-tenant retail investment attractive to a wide pool of private, passive investors that demand this type of asset, particularly in the current supply-constrained, low interest rate environment,” added Selznick.
About Hanley Investment Group Real Estate Advisors
Built on a solid foundation of performance, integrity and dedication, Hanley Investment Group Real Estate Advisors is a boutique retail investment brokerage firm with a three billion dollar transaction track record that is comprised of innovative specialists delivering unparalleled service and superior results that consistently exceed client expectations. Hanley Investment Group’s expertise, commitment and unwavering focus of putting the client’s needs first have continued to set the company apart in the industry. Hanley Investment Group works closely with individual investors, developers, and institutional property owners in every facet of the transaction to insure that the highest value is achieved. Clients rely on Hanley Investment Group to be the most knowledgeable and trusted source for valuation services, market information and retail property acquisitions and dispositions. For more information, visit the Company’s website at www.hanleyinvestment.com or call (949) 585-7610.