Rare New McDonald’s Sale in Los Angeles; Record Low 3.25% Cap Rate
AZUSA, Calif. – (RealEstateRama) — Hanley Investment Group Real Estate Advisors, a nationally-recognized real estate brokerage and advisory firm specializing in retail property sales, and SRS Real Estate Partners, the largest retail-focused real estate brokerage and advisory firm in North America specializing in property sales, leasing, and tenant representation, announced today that Executive Vice President Eric Wohl of Hanley Investment and Senior Vice President Michael Walseth of SRS’ National Net Lease Group, represented the seller in the sale of a brand new single-tenant McDonald’s ground lease in the City of Azusa, Calif. The purchase price was $3.54 million, which represented a cap rate of 3.25 percent, the lowest recorded closing cap rate for a new construction McDonald’s in the U.S. on record, according to CoStar.
The buyer, a private 1031 exchange buyer who lived near the property, was represented by Mark Repstad with Realty Advisory Group in Los Angeles. The seller, a private investor from Newport Beach, Calif., was represented by Wohl and Walseth.
Built in 2017 on 0.60 acres, the 4,365-square-foot double-drive-thru property is located at the signalized intersection of the I-210 freeway off-ramp and Azusa Avenue and features a freeway-visible electronic pylon sign. McDonald’s is shadow-anchored by a newly-built Home2 Suites by Hilton. According to Wohl, the property benefits from synergy with the hotel as well as excellent exposure at the signalized hard corner intersection of I-210 on/off ramp with 256,000 cars per day and Azusa Avenue with 28,800 cars per day. There are more than 166,000 potential customers residing within three miles of the property with a household income of over $76,000.
According to Walseth, the new 20-year ground lease is corporate guaranteed by McDonald’s USA, LLC, a publicly-traded company (NYSE:MCD) and is an investment grade-rated company with a Standard & Poor’s rating of BBB+. The lease also includes rare 10 percent increases every five years. The new construction restaurant is the company’s latest prototype store with 64 seats. McDonald’s is the world’s leading global foodservice retailer with approximately 37,000 locations in over 100 countries.
“McDonald’s continues to be the most sought-after single-tenant retail investment in today’s market,” said Wohl. “We have seen continued cap rate compression for new single-tenant McDonald’s over the past year, especially in California.”
Walseth continues, “The McDonald’s brand reigns supreme among its competitors when ranked by investor desirability. Investors are drawn to McDonald’s because they can be assured they are buying the best location in town at a rent that is typically at or slightly below market. Rarely available, when a McDonald’s asset comes to market you can expect multiple offers and occasional bidding wars among investors especially in highly sought-after, infill markets.”
“We procured multiple offers at list price in the first week of marketing. It is a prime example of the incredible demand for McDonald’s. This sale affirms the continued strong demand for corporate-backed single-tenant triple-net QSR investments in a dense, supply-constrained environment,” said Walseth and Wohl.
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a retail investment advisory firm with a $5 billion transaction track record nationwide, who works closely with individual investors, lending institutions, developers, and institutional property owners in every facet of the transaction to ensure that the highest value is achieved. For more information, visit www.hanleyinvestment.com.
About SRS Real Estate Partners
SRS Real Estate Partners is the largest real estate company in North America exclusively dedicated to retail services. Headquartered in Dallas with more than 20 offices worldwide, SRS’ strong reach and international presence provide the company with unparalleled knowledge both globally and domestically. As a result, clients of SRS have a competitive edge through a full range of offerings including brokerage services, corporate services, development services, and investment services. For more information, please visit www.srsre.com.
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