Gottschalks-Leased Properties on the Market

SAN FRANCISCO-Three net leased, leasehold properties in California are on the market for $27.3 million. Leased by Fresno, CA-based Gottschalks Inc., the properties include a 90,000-sf department store in East Hills Mall in Bakersfield, a 90,000-sf department store in Sherwood Mall in Stockton and a 420,000-sf warehouse and distribution facility in Madera.The disposition assignment is in the hands of GVA Worldwide Investments, specifically James Murphy with GVA Williams in New York and Tim Mason of GVA Whitney Cressman of San Francisco. The seller of the leasehold properties was not revealed in the offering information.According to the offering, Gottschalks’ rent for the three properties is $3.5 million per year, paid half-yearly in advance. All three of the leases expire in August 2009. There are three five-year renewal options at the lesser of 80% of the previous average rents paid ($2.6 million) or fair market value, then three more five-year renewal options at 100% fair market value. According to the offering, Gottschalks must renew on all properties or none. The unleveraged initial return is 13% through 2009 and, assuming a renewal, 9.7% after that, according to the offering.The seller’s leasehold interest in the Stockton location runs out in 2021. The seller’s lead hold interest in the Bakersfield and Madera properties ends in 2039. Gottschalks owns the land in Bakersfield and Madera. All of the properties were built in 1988.