TAMPA, FL—In a deal that demonstrates the triple-net lease market is still commanding low cap rates, the Regions Bank ground lease has traded for $3.7 million. The buyer was part of a 1031 exchange that also financed a small portion of the purchase through a life insurance company.
Jonathan Graber and Rafeal Wright of Franklin Street Real Estate Services represented the seller in the transaction, Nelco Kennedy Property, LLC. Richard Fisher of Hold-Thyssen represented the buyer, an investment group out of Germany.
“We do expect to see more 1031 exchanges in 2013,” Wright tells GlobeSt.com. “That's mostly because it's going to be a tremendous way to avoid taxes. Especially with the additional healthcare tax at 3.8% and capital gains at 20%, I expect 1031 exchanges to continue in 2013.”
The property had more than 10 years remaining on a long-term ground lease and closed with a 5.74% capitalization rate. This Regions Bank is an infill location with a strong deposit base and favorable lease terms.
“The cap rate was very aggressive in the market,” Wright says. “The buyers were German investors looking to place 1031 money in American real estate—this is a trend we've been seeing for many years now. A lot of foreign money has been flooding our markets looking to find yield.”
Regions Bank is located at 4128 W. Kennedy Boulevard and one of Tampa Bay's largest banks by market share with more than 1,700 banking offices across 16 states. The demand for long-term leases with investment-grade tenants such as Region's Bank is still very high.
“There was a tight time schedule for the year-end close but both parties were motivated to complete,” Graber says. “We were able to generate a tremendous amount of interest from domestic and foreign brokers, private investors, funds, and real estate investment trusts.”
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