Cedar has agreed to purchase a seven-acre parcel located at a new slip-ramp exit off the Pennsylvania Turnpike at Fort Washington where it will build the $7.8 million gym. L.A. Fitness will net lease the building for 15 years with three additional five-year options. Final approvals for the project are expected within 30 to 60 days and delivery is slated for fourth quarter 2002.
Conshohocken, PA-based FameCo Real Estate Corp. represented Cedar Income in the acquisition of the purchase contract from L.A. Fitness and structured the net lease deal. L.A. Fitness acquired the land from South Brunswick Industrial Properties Ltd. and WFP Pennland Co. LP.
According to Cedar chairman and CEO Leo S. Ullman, the Fort Washington deal is the first in what may be a minimum of three similar transactions with L.A. Fitness. "We are discussing the possibility of other similar properties in Pennsylvania," Ullman tells GlobeSt.com. "L.A. Fitness has identified a couple of sites and we are talking to them about the same type of arrangement."
While Cedar has recently sold off its non-core assets to focus on traditional retail properties in the Northeast, Ullman says the L.A. Fitness deal dovetails with the REIT's overall growth strategy. "It fits geographically very well because the properties that we've acquired have been in Pennsylvania, in the Philadelphia area," Ullman says. "And this building is essentially retail in the sense that it's a consumer product, a fitness facility.
Another plus for the project is its close proximity to the heavily populated Fort Washington Office Park area. "It's very attractive to us because of its location," Ullman says. "We think the Fort Washington Office Park is a tremendous facility with a very large number of employees and we think that this particular site is unique in that if the building ever had to be recycled, it could be done pretty easily. That's very attractive to us as well."
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