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Newmark completed four separate transactions of single-tenant retail properties located throughout Southern California for a total of $31 million.
Newmark’s Vice Chairman Bill Bauman, Executive Managing Director Kyle Miller and Directors Michael Fogel and Matt Schwartz executed the four transactions.
“Single-tenant retail assets with solid credit, an operating history, favorable lease terms and quality real estate fundamentals remain in high demand, amid volatile capital markets due to the COVID-19 pandemic,” said Bauman. “We are seeing 1031-exchange investors very active in the market and pleased with the IRS’ decision to provide relief/extensions on 1031 timelines.”
Miller added, “Essential retail tenants, such as grocers and drugstores, continue to be highly sought after by investors, especially those who have experienced a significant increase in sales as of late.”
The first property, occupied by CVS, is located at 42150 Jackson Street in lndio and sold for $3.9 million in an all-cash transaction at a 5.1% cap rate. The seller was a private Orange County-based investor and developer, and the buyer was a private investor.
The second property, occupied by McDonalds, is located at 1712 Pacific Coast Highway in Lomita and sold for $2.4 million in an all-cash transaction at a 2.77% cap rate. The seller was a private family trust. The buyer, McDonalds, exercised its right of first refusal after the Newmark team was able to generate multiple highly competitive offers.
The third property, which sold for $9.9 million at a 5.85% cap rate, is located at 14528 Palmdale Road in Victorville and is occupied by Cardenas, one of the leading Hispanic grocers in Southern California. The Newmark team advised the seller, a private Orange County-based developer, and Ed Barkett of Atlas Properties represented the buyer, a private, 1031-exchange investor.
The fourth property, located at 14351 Hindry Avenue in Hawthorne, is occupied by Bed, Bath & Beyond and sold for $14 million. The seller was Hawthorne Gateway, LP, a private Los Angeles-based partnership, and the 1031-exchange buyer was a private, family office. The Newmark team, along with Michael Grannis of Highland Partners, advised the seller, who has owned the property for nearly 18 years. Newmark helped to implement a break-up strategy that included a simultaneous pay-off and recapitalization of the existing loan to free up the Bed Bath & Beyond parcel at close of escrow.
In the last month, the Newmark team has launched over $150 million of high-profile, single-tenant transactions, including a Whole Foods in Santa Barbara and an Apple store located at Santa Monica’s Third Street Promenade, further underscoring the steady demand and momentum of single-tenant retail properties, amid recent economic turmoil.
According to Newmark Research, private buyers drove acquisitions in recent years, a trend that will persist in 2020. Many of these buyers are high-net-worth individuals in search of yields that exceed the Treasury. COVID-19’s effects on global stock markets, which are highly volatile in the current environment, also enhance the appeal and security of net-leased investments as property owners receive the benefits of an income stream from a tenant and the underlying value of the asset.
About Newmark
Newmark (“Newmark”), operated by Newmark Group, Inc. (“Newmark Group”) (NASDAQ: NMRK), is one of the world’s leading and most trusted commercial real estate advisory firms, offering a complete suite of services and products for both owners and occupiers. Together with London-based partner Knight Frank and independently-owned offices, Newmark’s 18,000 professionals operate from approximately 480 offices on six continents. Newmark’s investor/owner services and products include investment sales, agency leasing, property management, valuation and advisory, diligence, underwriting, government-sponsored enterprise lending, loan servicing, debt and structured finance and loan sales. Occupier services and products include tenant representation, real estate management technology systems, workplace and occupancy strategy, global corporate services consulting, project management, lease administration and facilities management. For further information, visit www.ngkf.com.
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