Benderson Buys 28-Property Portfolio of Fred Meyer Superstores

Florida-based Benderson Development bought a 4.5-million-square-foot, 28-property portfolio of absolute net-leased Fred Meyer superstores in a sale-leaseback transaction.

Institutional Property Advisors, a division of Marcus & Millichap, was the exclusive advisor to Cincinnati-based The Kroger Co. and Portland-based Fred Meyer Stores in the sale of the superstores, which consist of 380 acres across Washington, Oregon, Idaho, and Alaska. The Fred Meyer store chain is a wholly owned subsidiary of Kroger.

Kroger will execute new, 25-year absolute net leases for each property with an initial portfolio-wide base rent totaling $25 million per year, according to Patrick Toomey, IPA executive director. 

Tom J. Lagos, IPA executive director, said that Benderson Development stood out on price and terms against a very competitive field of over 20 qualified bidders.

The Fred Meyer stores in Washington State are in Shoreline, Bellingham, Everett, Lynnwood, Longview, Vancouver, Puyallup, Richland, and Tacoma (two stores). In Oregon, there are two stores in Eugene, three in Salem and the rest are in Albany, Beaverton, Corvallis, Portland, Medford, Oregon City, Roseburg, Springfield, The Dalles and Tualatin. The Idaho properties are in Nampa and Garden City. There is one Alaska store in Anchorage. 

Marcus & Millichap’s brokers of record in Washington, Oregon, Idaho, and Alaska are, respectively, Joel Deis, Adam Lewis, Curtis Cluff, and Carlton Smith. IPA’s Jose Carrazana, Jessica Baram and Ryan Garcia represented Fred Meyer Stores. “The property provides new ownership with a stable income stream secured by Kroger’s corporate guarantee and enhanced by contractual rent increases of 5% every five years,” noted Carrazana in a prepared statement.

The Fred Meyer portfolio represents Benderson Development’s sixth major acquisition in the past 18 months.

“The Pacific Northwest has always been one of our top areas of interest to grow our national footprint,” said Randy Benderson of Benderson Development in a prepared statement 

Observers expect sale-leasebacks to grow in popularity as the economic recovery from COVID-19 picks up steam.

Earlier this week, for example, Oak Street agreed to purchase real estate holding convenience store brands and fueling stations and lease it to GPM Investments.

Under the agreement, ARKO Corp.’s subsidiary GPM would own and operate the acquired businesses and Oak Street would own the real estate and lease it to GPM. Oak Street will commit up to $1 billion to the program for one year.

Camille Renshaw, CEO and co-founder of B+E Net Lease, expects that net lease property investors will see most real estate associated with corporate M&A activity come to market in the form of sale-leasebacks. “Due to the recent surge in net lease buyer activity that has compressed cap rates, strong companies such as ARKO are able to maximize their sales proceeds while maintaining relatively low rents, further enhancing their balance sheets,” she says.