Austin, TX, (May 13, 2015) — Sands Investment Group (SIG), the nation’s fastest growing net lease company, has announced the completion of two fast food net lease transactions that further underscore the investor demand for this product type.
Max Freedman, net lease advisor and specialist in the fast food sector, Sands Investment Group, represented the seller, a Wendy’s operator, in the $2.97 million sale leaseback of the Wendy’s located in Palmdale, CA at a 5.75% cap rate. The operator had been at the location since 2000, consistently producing more than $2 million in annual sales, making it one of the highest-producing fast food restaurants in the market. The operator was able to use the proceeds to pay off their existing debt obligations and fund the opening of new operations.
Freedman also represented the developer in the $1.5 million transaction for a new construction, build-to-suit Taco Bell located in Cairo, GA. The property provided an outlet for a 1031 exchange buyer to secure investment with an attractive 20-year absolute triple net lease at a 6% cap rate.
“These deals are indicative of what we are seeing in the franchise fast food net lease space right now,” noted Freedman, who oversees SIG’s Austin office. “At the same time we’re experiencing a lack of inventory, we’re seeing a larger buyer pool in the market that now includes the REITs and institutional buyers who had typically stayed away from non-credit tenants but are now chasing yield, making these more attractive opportunities.”
Another constant for fast food that drives demand is location. These sites are typically at high traffic, signalized intersections creating greater residual value for the real estate owners over the term of the lease. For example, the Wendy’s site is located at the signalized entrance to a Target/Lowe’s supercenter that is one of the Antelope Valley’s main shopping destinations. “The sale-leaseback was a strategic play for this operator, and one we recommend for franchise operators, as this operator was able to take the proceeds to remove existing debt and fund future growth,” said Freedman.
Freedman adds that there are also more developers jumping into this space. “As we witnessed in the Taco Bell transaction, the developer gains from working with the smaller operators who need the financing and site selection support. In this case, the build-to-suit received multiple full-price offers, which benefitted the developer.”
Since the beginning of the year, SIG has seen a 25 percent jump in fast food net lease transactions it has completed as compared to the same period in 2014.
“Across the board, transactions we’ve closed in the fast food space are typically generating multiple offers and closing at or above the original asking price. The velocity only underscores the demand for a complete strategy and deep understanding of the transaction from all angles. You have to understand the product-type, in this case fast food, from all aspects and be able to evaluate the benefits for all involved,” said Chris Sands, founder, Sands Investment Group.
About Sands Investment Group: Sands Investment Group is a commercial real estate brokerage firm that specializes in the buying and selling of net lease properties for private investors and institutions across the United States. Since its founding in 2010, SIG has closed over 625 transactions worth more than $2.1 Billion in 45 states. Advisors with the company currently have over $300 million in active inventory. As the first boutique firm to offer a national listing platform while providing the proven track record of a large firm, Sands Investment Group has become one of the nation’s fastest growing net lease companies in the US. As a leader in the industry and the only to offer product-type specialization, the firm’s experience in net lease, retail, office and industrial transactions is unparalleled. Sands Investment Group has offices in Santa Monica, CA, Charleston, SC, Philadelphia, PA, Atlanta, GA, Austin, TX and Indianapolis, IN. Learn more at www.signnn.com.