The Green Valley Ranch property was 100% leased to Del Taco Inc (nasdaq: TACO), the second largest Mexican restaurant chain in the world. Green Valley is an upscale neighborhood of Henderson,Nevada and a community development of 8,400 acres on the southeast part of the Las Vegas valley. Extenuating circumstances caused the seller to liquidate. The seller had financed this site with a $1.3m loan in December 2003. The acquisition cost was 57% of the 2003 loan. Store sales had deteriorated since the beginning of the 2007 recession. Bedrock Investments Group (BIG) recognized the potential for this property even though less than two years remained on the lease at acquisition. The existing 250,000+ sf retail center across the street was vacated in 2009 in anticipation of the development of a casino and hotel which was never approved. The center is in the initial stages of a renovation and re-merchandising program. A galaxy theater complex with stadium seating opened in 2015. Taco Bell adjacent to the Del Taco closed prior to big acquisition, and sales at Del Taco increased by 20%+. Del Taco renewed their lease for the property for ten (10) years and the property was sold for a sizable gain to partners.
The site was placed under contract with no lease in place with Taco Bell. This Taco Bell location has been a solidly performing store for 30+ years. During the due diligence period, the LLC negotiated a new lease and committed to a renovation of the 1970’s era building. The seller did not have the capital to renovate the facility and the tenant was reluctant to spend over $250,000 in interior improvements to the facility without a lease. The total acquisition cost includes full exterior remodel completed in 2013. The Taco Bell franchisee paid for the new interior upgrade package. The operator is a very successful Phoenix based franchisee with 117 Yum brand units. The store franchise agreement extends through 2019 and will be renewed for additional 10-years. Once redeveloped, the unit was fully ADA compliant and resembled a new Taco Bell outlet. The site is located in a “fast food corridor” on Glendale Avenue with excellent demographics for a fast food restaurant. The new exterior will compliment Yum branding programs. In April 2015, this asset was sold to an AZ based investor at a substantial gain to the investors. Proceeds were invested as a 1031 tax deferred exchange into a Fresenius SE & Co. HGAA (ETR:FRE) dba Fresenius Medical Care (FMCc) facility in Baton Rouge, LA. Investors benefited from the sale and acquisition by receiving increased monthly cash flow, superior tenant credit and a longer lease term (see FMC Baton Rouge, LA).
The 14,400 sf property was acquired as a lender REO from US Bank. The lease with Fresenius SE & Co. KGAA (ETR:FRE) dba Fresenius Medical Care (FMC) had 6+ years remaining on the primary term. The property, previously a Western Auto store, is situated on a main thoroughfare in Seguin Texas, adjacent to Texas Lutheran University, and numerous commercial businesses. The property was listed for sale at $1,400,000.00. BR Seguin LLC negotiated a sales price to provide an attractive return to its investors/partners based on the 2012 net operating income (NOI) and closed on the acquisition in September 2012. FMC expanded the facility by an additional eight (8) dialysis stations in 2014. FMC has invested over $500,000.00 in capital improvements to the facility since 2009 and two lease renewals have occurred since the original acquisition.
This freestanding facility is located on a corner lot on Getwell Road (35,000+ vehicle trips per day) and in close proximity to Sam’s Club, Family Dollar and I-240/Getwell access ramp. The 7,000 sf facility was developed as “build-to-suit” for Advance auto Parts (NYSE: AAP) which has occupied it for nearly twenty years. The site has been improved with the latest AAP branding interior and exterior upgrades. Store sales for 2014 & 2015 exceeded $1,200,000 giving it a very healthy rent to sales ratio of 6.14%. The surrounding demographics strongly support this retail use. The freestanding building has ample parking and vehicular access that lends itself to a variety of retail uses. Moreover, the contract rent and acquisition cost per square foot are below market. Seller sold because of concerns regarding lease expiration in 2017 and need to reposition capital.
Bedrock Investments Group (BIG) acquired this 6,730 sf freestanding dialysis facility on over 1.0 acre of land leased to Fresenius SE & Co. KGAA (ETR:FRE) dba Fresenius Medical Care (FMC) in 2015. Centerville, TN is the county seat for Hickman County, approximately 50 miles from Nashville, TN. The “build-to-suit” 16 chair facility was opened in 2007 with existing capacity for service expansion. A strategic location for FMC, the site currently operates two treatment shifts three (3) days per week at maximum capacity. The Life Care Center of Centerville, a skilled nursing facility with 132 beds is adjacent to the site. The Hickman Community Nursing Home, less than ½ mile from the site, has 40 beds. FMC Centerville is approximately 1/4 mile from St. Thomas Hickman Hospital, the only acute care hospital in Hickman County. At time of acquisition, the lease had four (4) years and ten (10) months of term remaining with three (3) options. Purchase price ($230.54/sf) is below estimated replacement cost for this building with approximately $1,000,000 in interior improvements. The closest dialysis facilities are FMC Dickson, (twenty-nine (29) miles) and FMC Columbia (thirty (30) miles). The most recent CAPEX improvements included a new 40 year roof in 2013 and replacement of an HVAC unit in 2013. The owners were “out-of-state” octogenarians selling for health and estate planning requirements. Lease was extended in 2020.
Goodyear Tire & Rubber (NASDAQ: GT) is a Fortune 500 company and S&P 500 component. The 5,371 sf building is a freestanding 9-bay facility with brick exterior and CBS construction. The property was acquired with nearly 3.5 years remaining on the original “build-to-suit” lease. The acquisition cost ($155.51/sf) is 38% below estimated freestanding building replacement cost ($250.00/sf). The contract rent of $12.24/sf is 30% below current trade area market rents of $20.00/sf. The rent to sales ratio of 5.48% is very healthy. Bedrock Investments Group (BIG) acquired a tenant in common (TIC) interest in this property to facilitate a 1031 exchange requirement with one of their investor partners. The improvements sit on 0.69 acres just north of the intersection of Del Prado Boulevard and SE 22nd Terrace, directly across from Coralwood Center, a 250,000 sf shopping center. Del Prado Boulevard in Cape Coral, Florida is a major traffic corridor. The facility is surrounded by national retailers such as LA Fitness, JC Penney, Bealls, Wells Fargo, BB&T, Suntrust, KFC, Dollar General and Applebee’s. The owner sold due to immediate financial demands for disabled family member.
The FMC Warner Robins is a 6,600 SF freestanding medical building built in 1997 on an 88,862 SF lot (7.43% coverage). It is a beautiful, well-located facility with excess land for expansion within the Warner Robins Metropolitan Statistical Area. Fresenius Medical Care has occupied this build-to-suit facility for 17 years and has the FMC regional office and training center in the adjacent office building. The facility is operating near capacity with over 340 procedures per week. The Acquisition Cost ($238.63/SF) is significantly below replacement cost for this building with improvements estimated to be $350.00/SF. The contract rent of $1.65/SF NNN is 18% below market rent of $2.00/SF NNN.
The building is located in a business park to the rear of Target anchored power center and within 1⁄4 mile of the regional center named Houston County Galleria. The property was originally acquired in 1997 for $1,100,000. The most recent CAPEX improvements included a new 40-year roof and HVAC in 2013. The octogenarian owner sold due to poor health and estate planning. The lease for this facility was recently extended.
Advance Auto Parts (NYSE: AAP) is a Fortune 500 company with 4,500 locations in the USA. AAP has occupied this 7,000 sf build-to-suit facility since October 2001. Seymour Johnson Air Force Base is located to the southeast of Goldsboro, NC. In the DOD 2005 BRAC recommendations, Grand Forks Air Force Base, ND would distribute the 319th Air Refueling Wing’s KC-135r aircraft to the 916th Air Refueling Wing (AFRC) at Seymour Johnson AFB. The realignment brought hundreds of new personnel and their families to Goldsboro. This facility is located on heavily traveled Grantham Street (Route 70), with proximity to Little River Square (120,000 sf) and is adjacent to local retailers Food Lion, Tractor Supply, Dollar General, McDonald’s and a Honda dealership. CAPEX improvements performed by AAP in 2013 included building and pylon signage, painting and interior re-merchandising. Bedrock Investments Group’s (BIG) acquisition cost for the property was $137.50/sf, approximately 20% below estimated development replacement cost. The owner originally acquired the property as part of a portfolio and liquidated for estate settlement purposes. In early 2016, BIG negotiated a “blend and extend” lease renewal that extended the lease expiration to December 31, 2021.
Goodyear Tire & Rubber (NASDAQ: GT) is a Fortune 500 company and S&P 500 component. Goodyear Tire and Rubber has occupied this 5,800 sf “build-to-suit” facility for 15 years with nearly five (5) years remaining on the first lease option period at time of acquisition. The acquisition cost ($147.00/sf) was 26% below estimated freestanding building replacement cost ($200.00/sf). The contract rent of $12.67/sf is well below market rent of $20.00/sf. The property was appraised at $1,050,000.00 in 2012. The site is located in close proximity to the south gate to Naval Air Station Jacksonville, near I-295, and nearby retailers Sweet Tomatoes, Burger King, Steak and Shake, Chili’s, Sonic, Arby’s, and Marriott Courtyard. The owner sold in order to invest in another opportunity and pay off the maturing mortgage. After observing flat sales for a two year period (2013 and 2014), a decision was made to sell the property and reposition the capital to a new and a more financially secure property. The property was sold for $1,016,000.00 in January 2016 and the proceeds invested in the 1031 exchange acquisition of a DaVita Dialysis Center in Marshalltown, IA.
The 12,211 sf Fresenius Medical Care (FMC) Saginaw Riverside facility was an opportunistic acquisition where Bedrock Investments Group’s (BIG) expertise added significant value to the property. Listed at $900,000.00, the property fell out of escrow repeatedly due to the inability of the prospective buyers to extend the lease term or finance the property. BIG purchased the property for $625,000.00. Two units (approximately 73%) of the condominium building were leased to Fresenius SE & Co. KGAA (ETR:FRE) dba Fresenius Medical Care (FMC). FMC Riverside is strategically located near two medical centers, major surface streets, and interstates 75 and 675. The facility has 32 stations, running two shifts per day Monday through Saturday equating to 300+ procedures per week. The acquisition cost ($50.00/sf) was significantly below replacement cost for building and property. The investment strategy was to process a subdivision map to secure fee ownership of the FMC portion of the building, remodel the facility and site with retained capital and renew tenant for an extended term. In 2014, the partners purchased 1.0 acre of adjacent river front land and annexed the adjacent street for a total of $9,000 plus costs. The building was painted, new ADA ramp and awning installed, new landscaping installed, roof repaired/covered with a new surface, new building signage, and the parking lot repaired with slurry, seal and stripe. FMC has renewed for an additional five (5) years with a 10% increase in rent.
The 7,000 sf Advance Auto Parts (NYSE: AAP) in Pittston, PA is a corporate operated store. This location was acquired with five (5) years remaining on the existing term plus two 5-year option periods. AAP has occupied this “build-to-suit” facility for over 13 years. The purchase price ($108.00/sf) is 25% below replacement cost for this freestanding building and at a capitalization rate 100 basis point higher than similar national AAP sales comparables at time of acquisition. The location on State Route 11 is in short proximity to I-81 & I-476. The Big K and Walgreens center is located directly across the freeway from the site on Route 11. The AAP store is less than one mile to Avoca Regional Airport. Building design with excess land provides numerous re-use or expansion possibilities. The property was originally acquired in 2002 for $1,200,000.00. The owner at time of purchase sold the property to secure funds to acquire another multi-property portfolio.
Bedrock Investments Group (BIG) acquired two freestanding, 5,934 sf medical buildings built in 2004 on 1.4 acres (61,134 sq ft, 9.7% coverage). The Gatlin Medical Center is a beautiful well-located two building facility that is located approximately one mile from the new Martin Health Systems Hospital, a 300+ bed facility. The buildings are occupied by an Optometrist and an ENT Medical group. Leases have annual increases and rental revenues are net of taxes, insurance and common area maintenance. Both leases had over four years of term remaining at time of acquisition. The property has over 400+ lineal feet of frontage on Gatlin Blvd, a major retail corridor in Port St. Lucie, with traffic counts over 32,000 vehicles per day. Major retailers within one half mile include Sam’s Club, WalMart, B of A, McDonalds and Taco Bell among others. Investment strategy is a long-term hold or to perform a lot split to enable each building to be sold separately if desired. The octogenarian owner sold due to poor health and estate planning. The property was sold to the ENT Group which needed expansion space for their growing practice.