IRVINE, CA-As GlobeSt.com reported earlier today, locally based retail investment group Hanley Investment Real Estate Advisors ended 2012 with a bang, closing out the fourth quarter with the sale of 23 retail properties totaling more than $90 million. The firm also set multiple records in 2012 for the lowest capitalization rate for single-tenant drug stores.
In April, Hanley achieved the lowest cap rate for a Walgreens in more than three years in San Bernardino County with the sale of a Walgreens in Victorville at a 5.69% cap rate and total sales price of $7.469 million. And in August, the firm sold a single-tenant CVS/pharmacy ground lease in Fresno at the lowest cap rate for all single-tenant drug stores in the nation in 2012: 5.25% at a sales price of $5.24 million.
The company also achieved record low cap-rate sales for single-tenant banks three years in a row. Most recently, in June, Hanley achieved a 5.1% cap rate for a Bank of America in Lancaster, CA, and the lowest cap rate in five years for a McDonald's in Orange County with the sale of a single-tenant McDonald's ground lease in Santa Ana at a 4.25% cap rate.
“Capitalization rates for single-tenant assets have dropped lower than where they were in 2006-2007, which truly speaks to the high demand for net-lease properties and the lack of alternative investments in the marketplace,” said Eric P. Wohl, president of HIG NNN, a division of Hanley Investment Group specializing in the sale of single-tenant net-leased properties, in a prepared statement. “Buyers are paying a large premium for well-located single-tenant assets with corporately backed leases in strong locations. We have also seen a rapid increase in sale-leaseback activity as corporations and franchisees are able to get top dollar for their real estate holdings and realize 100% of the current market value so they can redeploy those funds into their core business.”
Wohl also said that single-tenant net-lease sector of the market is still one of the hottest segments within commercial real estate. Lack of supply, record low interest rates and slower tenant expansion plans are creating a feeding frenzy for corporately backed single-tenant properties such as McDonald's, CVS, Walgreens, Chase and Wells Fargo.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
