Franklin Street announces the sale of five NNN properties with a lease term under 10 years including BMO Harris Bank, two Tuffy Tire and Auto Service centers, a Tire Kingdom, and a Dunkin Donuts for $8,120,000.
Jon Graber and Rafeal Wright of Franklin Street Real Estate Services represented the sellers for each of the sales except for Tire Kingdom, where they represented the buyer. All of the investors plan on passively holding the properties over the remaining terms of their leases.
“Buyers are looking for higher yield investments and are now turning to NNN deals with terms shorter than 10 years or credit ratings that are lower than investment grade,” Graber said. “Finding the right buyer to fit the risk profile is a challenge. Some are hard to find debt for due to the short-term leases in turn, requiring cash buyers.”
All of the transactions had less than 10 years remaining on their leases and the majority were located in tertiary markets Wright said. “Only one had investment-grade credit and several had landlord responsibilities that pushed cap rates higher. This is where guarantees and lease terms come heavily into play,” he said.
According to Graber, the average cap rate for all of the transactions was approximately 7.3 percent.
“Due to light inventory, cap rates have continued to compress over the past year anywhere from 25 to 75 basis points depending on the tenant,” Graber said. “This is due to host of reasons including historically low interest rates, lack of supply, and increased demand from both domestic and foreign capital.”
The BMO Harris Bank is located at 103 W. Bloomingdale Ave. in Brandon, Fla; the Tuffy’s are located at 182 S.W. Port St. Lucie Blvd. in Port St. Lucie, Fla. and 1280 Commercial Way in Springhill, Fla.; the Tire Kingdom is located at 8650 Seminole Blvd. in Seminole, Fla.; and the Dunkin Donuts is located at 40076 U.S. Highway 19 N. in Tarpon Springs, Fla.
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