Costa Mesa, Calif. (April 3, 2018) – SRS’ National Net Lease Group announced today that senior vice president, Michael Walseth of the Newport Beach office represented the seller in the sale of an auto-related triple-net investment (land only) in the city of Costa Mesa, Calif. The purchase price was $2.375 million equating to a 2.57% cap rate, a national record price for an automotive triple-net investment verified by CoStar research. The ground lease had approximately 14 years remaining at the close of escrow.
The seller, an Orange County based private investor, was represented by Walseth. The buyer, also Orange County based, represented themselves.
Originally built in 1972 on .80 acres, the 13,200-square-foot property is located on the Prime Harbor Boulevard Commercial corridor just north of 9th Street in Costa Mesa, Calif. According to Walseth, “This rare offering presented an investor with a low land and building basis with significant in-place intrinsic value. The absolute-net lease provides the investor with stable, inflation-hedged income and potential to unlock significant value when the lease expires down the road.”
According to Walseth the ground lease is guaranteed by a Los Angeles based entity who subleases the property to multiple sub-tenants currently occupying the building. The lease includes CPI adjustment increases every five years.
“Coastal Orange County retail investments continue to trade aggressively as investors seek significant appreciation potential coupled with stable in-place income,” said Walseth. “These assets rarely come to market. When they do they generate a huge amount of interest usually resulting in a competitive, multiple bid sale environment.”
Walseth continues, “Many owners of coastal Orange County real estate are taking advantage of low cap rates on the coast and trading into markets where they can purchase equivalent triple-net properties with significantly higher cash flow. A triple-net lease backed by a strong credit profile in popular markets such Texas and Florida provide investors with a great opportunity to increase their cash flow while not taking on any additional landlord or management responsibilities. It is not uncommon for investors to increase cash flow by 50 to 100 percent by purchasing well-located investment properties in popular MSA’s outside of California.”
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SRS Real Estate Partners is the largest real estate company in the U.S. exclusively dedicated to retail services. Headquartered in Dallas with more than 20 offices worldwide, SRS’ strong reach and international presence provide the company with unparalleled knowledge both globally and domestically. As a result, clients of SRS have a competitive edge through a full range of offerings including brokerage services, corporate services, development services, and investment services. Since its inception in 1986, SRS has built a strong foundation in the retail real estate world and grown into one of the industry’s most influential and respected leaders. Our success is measured in the achievement of our clients’ objectives, satisfaction and trust. For more information, please visit srsre.com.