Sale Achieves a Record-Low Cap Rate in the U.S.
MURRIETA, Calif. – RealEstateRama – 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 has completed the sale of a single-tenant net-leased retail property occupied by Smart & Final Extra! located in southwestern Riverside County in Murrieta, California. The sale price was $8.5 million, representing a cap rate of 4.68%, a record-low cap rate for a single-tenant Smart & Final in the U.S.
Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the seller, a private partnership based in San Diego, California. The buyer, Anza Drive Properties, LLC based in Los Angeles County, was represented by Kris Hons of Stevenson Real Estate Services in Glendale, California.
“We generated 10 competitive and qualified offers in the first two weeks of marketing, showing the unprecedented demand for essential ‘daily needs’ single-tenant grocery investments,” said Asher. “We secured an all-cash 1031 exchange buyer based in Southern California and negotiated a short due diligence period to achieve the seller’s objectives. We closed at 99% of the asking price and achieved an all-time record-low cap rate nationwide for a single-tenant Smart & Final Extra! under $11 million.”
The 20,750-square-foot building occupied by Smart & Final Extra! was built in 2003 and is situated on 2.16 acres at the signalized intersection of Madison Avenue and Los Alamos Road (27,000 cars per day) along Interstate 15 freeway. The freeway visible pylon sign provides excellent exposure to both northbound and southbound travelers from Interstate 15 (140,000 cars per day) being able to access the site visa the Murrieta Hot Springs Road exit. Interstate 15 is a primary north/south state highway connecting San Bernardino, Riverside and San Diego counties.
“Smart & Final has an 18-year operating history at this location and benefits from co-tenants Best Buy and Sportsman’s Warehouse with nearby national and regional retailers including Home Depot, Kohl’s, Lowe’s, Target, Walmart, 99 Cents Only, Albertsons, Ashley HomeStore, Best Buy, Big Lots, Big 5 Sporting Goods, Chick-fil-A, IHOP, McDonald’s, PetSmart, Savers, Starbucks and Wells Fargo,” Asher noted.
“Investors were also attracted to the long-term lease, affluent demographics in the area and its growing population,” said Asher. “The average household income is nearly $115,000 within a five-mile radius of the property.”
Murrieta has seen a 470% population increase since becoming a city in 1991 and is projecting a 41.2% increase in job growth over the next 10 years with 69% of the current labor force having a bachelor’s degree or higher.
Smart & Final is one of the oldest and longest continuously operating food retailers in the United States and operates more than 250 stores in California, Arizona and Nevada with additional stores in Northern Mexico operated through a joint venture. It was also recently acquired by Bodega Latina, the parent company of El Super and Fiesta Mart, and a subsidiary of Mexican supermarket operator Grupo Comercial Chedraui. According to Supermarket News, plans call for Smart & Final to retain its existing operations and management team, led by CEO David Hirz. Smart & Final — marking its 150th anniversary in 2021 — generated U.S. revenue of about $4.1 billion in its fiscal year ended Jan. 3, 2021, with roughly 70% of sales from household customers and 30% from business customers.
“As an essential business and daily-needs tenant, single-tenant grocery investments have remained one of the most sought-after retail assets in this market,” said Asher. “Investors see a flight to safety and security in the grocery sector. Hanley Investment Group has experienced significant demand for single-tenant net-leased grocery assets in markets across the U.S. in 2021 and we expect this trend to continue in 2022 and beyond.”
About Hanley Investment Group
Hanley Investment Group Real Estate Advisors is a real estate brokerage and advisory services company with an $8.9 billion transaction track record that specializes in the sale of retail properties nationwide. Our expertise, proven track record, and unwavering dedication to putting clients’ needs first set us apart in the industry. Hanley Investment Group creates value by delivering exceptional results through the use of property-specific marketing strategies, cutting-edge technology, and local market knowledge. Our nationwide relationships with investors, developers, institutions, franchisees, brokers, and 1031 exchange buyers are unparalleled in the industry, translating into maximum exposure and pricing for each property. With unmatched service, Hanley Investment Group has redefined the experience of selling retail investment properties. For more information, visit www.hanleyinvestment.com.
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