ALISO VIEJO, CA May 16, 2016 — A team of Colliers’s International (NASDAQ: CIGI) (TRX: CIG) retail investment brokers have again established a new national record for capitalization rates – their fourth record cap rate since the beginning of the year – after the recent $18.5 million sale of a single-tenant PetSmart location in Aliso Viejo, California. The record cap rate was 4.62 percent.
In three other triple-net transactions, Colliers Executive Vice President Jereme Snyder and Senior Vice President Eric Carlton also established new national capitalization rate records for a single-tenant Walgreens Drug Store site in Thousand Oaks, California at a flat 4%; a CVS Drug Store in Clovis, California in the Central Valley at 4%; and for a single-tenant AutoZone, which did not want either the record cap rate or the property’s location divulged.
In their latest record-setting transaction, an Orange County-based private investor acquired both the land and building that is occupied by one of the busiest PetSmart locations in Southern California, the nation’s dominant chain retailer catering to pets and their owners. Along with the record cap rate, the transaction included an absolute triple-net lease with more than 17 years remaining on its term with optional renewals.
Located at 23511 Aliso Creek Rd., the store is one of several anchor tenants for the sprawling Aliso Town Center in the Orange County municipality of Aliso Viejo. While the center, which includes approximately one mile of frontage along Aliso Creek Road, benefits from the heavily-trafficked intersection of Pacific Park Drive and Aliso Creek Road, as well as the adjacent 73 Toll Road that bi-sects southern Orange County between San Juan Capistrano and Newport Beach. It also is surrounded by some of the county’s densest mix of housing with apartments, condominiums and single-family residences integrated into a portion of the center and surrounding it.
“This was a well-qualified 1031 tax exchange buyer from Orange County who needed to locate a quality property and then close quickly to meet the looming tax exchange deadline,” said Snyder. “In the process of meeting the client’s needs, this absolute NNN transaction turned out to be a real breakthrough in terms of the cap rate, especially at this price point. We have not found any other PetSmart site sold with a comparable cap rate anywhere in the U.S.”
Beginning with a bidding process, Snyder and Carlton orchestrated all parts of the complex transaction. They selected the buyer, who was required to deposit $200,000 in non-refundable funds upon opening of escrow, and assisted in finding suitable financing. Escrow closed in just 30 days.
“Despite a very tight deadline, the timing was right for both buyer and seller, the credit strength of the buyer was an obvious plus for us, and the size of the deal fulfilled the buyer’s exchange portfolio obligation,” Carlton said. “All of these factors and more helped create a near-perfect storm for us to complete this transaction in such a short period.”
The seller was a Los Angeles-based developer who Snyder and Carlton have represented on a variety of different transactions.
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