Case Study – Record Single Tenant NNN Sale Price/PSF; Development Presale
Location: 137 Serramonte Ctr, Daly City, CA
Background:
- Former Union 76 gas station site; main entrance pad to Serramonte Center (major regional power center, premium Bay Area Peninsula location).
- Subject property was the only pad not owned by the REIT that owns Serramonte Center; REIT offered to purchase the subject property for $5M ($221/PSF – land value).
Advisory and Services Rendered:
- Advised client to find a tenant and determine if ground lease or build to suit option would maximize disposition value versus an outright land sale.
- Fully negotiated Verizon Wireless corporate lease on behalf of the client, including overcoming significant environmental, construction/delivery, over market rent, and city related issues.
- Provided fee development oversight to ensure entitlement, building department, and construction matters were in sync with tenant’s timing/expectations.
- Marketed the property for sale prior to construction being complete and tenant accepting delivery of the premises (creative marketing and deal structure).
Results:
- Delivered brand new corporate Verizon Wireless NNN 10-Year Lease, 4,500 square foot, newly constructed build to suit, net operating income of $528,510 ($9.79/PSF).
- Total costs for construction, leasing commissions, tenant improvements, etc. (approximately $2M).
- Sold to Bay Area based, 1031 exchange buyer with local outside broker representation for $10,050,000 (5.25% cap; $2,233/PSF). The price per square foot set a national record for a stand-alone single tenant NNN leased retail investment.
- Net sale proceeds to the client was over $8,500,000 after construction costs vs. the original $5M “as-is” sale to the REIT that owns Serramonte Center- a $3.5M delta, or 70% in additional value generated.
For more information please contact:
Jonathan Selznick
Senior Vice-President & Principal
Lee & Associates | Ontario
D 949.734.0243
F 949.271.4544|
jselznick@lee-assoc.com