We are pleased to bring this transaction to a close for our buyer who got a phenomenal deal.
BELOW MARKET RENTS
This property is currently leased far below market rental rates. Market rents are $19 - $23 per foot and this property is leased out at $13.25/ft. What this means is that the landlord has a TREMENDOUS upside in a renewal once the current lease expires. This renewal could yield another $80,000 in net rent for the landlord.
PRICED BELOW MARKET
The asking cap rate on this property was a 7.5% cap rate, which provided our client a significantly higher return than other comparable corporately guaranteed properties on the market. We feel this property could have sold closer to a 6% cap rate based on current market comparable sales from similar properties - especially because if is an absolute NNN lease. We know the market agreed because we competed for this and won against over 10 others because of our strong terms.
PRICED BELOW REPLACEMENT VALUE
At $176 per foot, you could not build this property new today for the same price that it is available for today with a 5-year NNN lease. Because of that, the property would be worth the current value even without the Aaron's lease.
BRAND NEW LEASE / CORPORATE GUARANTEE
Aaron's renewed the lease early demonstrating a strong commitment to the location. Early renewals generally indicate that the location is a strong performer and the tenant wants to make sure they can stay for a very long time.
HIGH-GROWTH TRADE AREA
The immediate area surrounding this property is experiencing over a 5% population growth per year boom. This equates to new homes and new customers. The area is also filled with many of your major retailers which draw in more customers. In addition to that, the area is also tremendously dense in terms of population and the property sees excellent traffic counts along McCart Ave.
CONFIRMED TOP-PERFORMING STORE
As part of our extensive diligence process, we met in person with on-site management who informed us that its location was a "consolidation store" meaning they had closed down a nearby store and now run that full book of business from this location. The manager let us know that this store is "one of the top in Texas" and he felt very good that they would be doing business here for a long time.
HIGHLY ADAPTIVE BUILDING FOR FUTURE REUSE
The building itself is perfectly suited to remain an Aaron's for a long time, be leased for a new tenant, or even chopped up into smaller suites as a way to increase rents for different tenants as a way to add value down the road. Either way, our client is getting a great return and holds all the cards for that future possibility
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