Investors Pursuing Deals With Triple Net Leases

0

A Del Taco restaurant in Lancaster has traded hands for $2.25 million. That March 11 sale may be a small deal, but it represents a big trend for property buyers.

Some real estate investors are favoring purchases like the restaurant property single corporate tenants locked into triple net leases, which require the tenant to pay property taxes, insurance and maintenance costs.

Such leases mean less work for property owners and a reliable revenue stream.

“People are out there looking for passive, secure income and the alternatives are just not attractive look at the stock market,” said Matt Mousavi of Faris Lee Investments, who represented seller Innovative Property Partners LLC, an Irvine real estate investor.

An unnamed L.A. medical doctor bought the 2,547-square-foot building at 1751 E. Ave. J, which is leased to Lake Forest-based Del Taco LLC for the next 19 years. The fast-food eatery is adjacent to a Wal-Mart Super-Center, another attractive feature, because of the foot traffic the big-box store generates.

“(The buyer) liked that it was corporate and a signalized intersection. The tenant takes care of everything,” said Warren Berzack of Investment Real Estate Associates, who represented the buyer. “The property has strong sales and 30,000 cars a day pass the intersection.”

Innovative Property Partners acquired the property only last year, Mousavi said, when it entered into a sale-and-lease-back transaction with Del Taco, which continues to operate the fast-food restaurant.

“It is a fair price for both parties, and it’s a testament that the market for single tenants is still very strong and very active,” he said.

Dennis Vaccaro of Faris Lee also represented the seller.

Venice Sale

A 10-unit Venice apartment building just a few blocks from the beach has been sold for $3.8 million by an owner who was given the property to settle a debt.

The seller, an unnamed individual who did business as 4567 Lexington Avenue LLC, had owned the building for less than a year after the settlement, according to the broker.

“I think he just wanted to liquidate,” said Laurie Lustig-Bower of CB Richard Ellis Group Inc., who represented 4567 Lexington. “He didn’t want to own it as an apartment building.”

The 209 N. Venice Blvd. property includes a primary building constructed in 1914 and rear building dating to 1986. The property has been substantially renovated and is thus not subject to the L.A. rent control ordinance.

The buyer, an unnamed West L.A. real estate investor doing business as Venice Blue House LLC, purchased the property in a 1031 tax-deferred exchange.

“It’s a great building in a great area, three blocks from the ocean and (the buyer) knows that it will always be leased,” said Eric Sackler, a Coldwell Banker broker who represented the buyer. “Even with this market in declining rents, she has confidence she will always be able to lease it.”

The building is fully occupied and Sackler described it as “turn-key.” It includes two one-bedroom apartments, three two-bedroom units and five two-bedroom units with lofts. The rents range from $1,500 to $2,800 per month. The sale breaks down to $380,159 per unit.

Lustig-Bower’s five-member team at CB Richard Ellis also worked on the sale.

Sublease Trend

Comparison shopping company Shopzilla Inc., which has a Web site where users can compare prices on products, is trying to sublease a part of its West L.A. office.

The move comes on the heels of a downsizing by the company, a subsidiary of E.W. Scripps Co. Shopzilla is among many outfits giving back space in the recession, said David Toomey of Cresa Partners, Shopzilla’s broker.

“We are definitely seeing a growing number of subleases hit the market, unfortunately,” said Toomey. “It’s across the board.”

Shopzilla hopes to sublease 30,000 square feet of its 70,000-square-foot offices at Westside Media Center, owned by Kilroy Realty Corp.

The 375,000-square-foot media center at 12100, 12200 and 12312 W. Olympic Blvd. is home to Internet video service Hulu, online movie ticket seller Fandango and Wasserman Media Group. Shopzilla’s sublease space is on the fourth floor of the 12200 building with the lease expiring in summer 2010.

Brad Kates, chief financial officer of Shopzilla, said that in addition to the company getting “leaner,” some employees moved to its London office in the last 12 months.

“We definitely have more space than we probably have needed for a little while and this created an opportunity to reduce our expenses,” Kates said. “When we originally took the space we thought we’d be growing the L.A. operation quicker than we did.”


Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.

No posts to display