Retail Property Housing Kohl’s in L.A. Trades Hands at Record-Breaking Cap Rate
- Mar 06, 2015
A Los Angeles area Kohl’s recently traded hands in a deal worth a reported $22 million. The transaction was arranged by Ed Hanley, Kevin Fryman and Eric Wohl of the Hanley Investment Group. The team arranged the deal for the triple-net leased property at a cap rate of 4.8 percent, one that Hanley Investment Group calls “the all-time lowest ever for a single-tenant Kohl’s in the U.S.”
The property is an 88,000 square-foot retail facility that will stay under contract with retailer Kohl’s for another 14 years. The only tenant at the property also has strong incentives to re-sign. “The record low cap rate was due to the lack of inventory and the fact that cap rates are continuing to compress, combined with the long-term lease, Kohl’s investment grade credit and its excellent location.”
The new owner of the retail property is a private northern California 1031 Exchange investor. Hanley Investment Group worked on behalf of the seller in arranging the record-breaking deal. The previous record in terms of lowest cap rate for a single-tenant Kohl’s was previously held by a Redondo Beach property that traded hands back in November 2013. This transaction marked a 50 basis point lower cap rate than that property.
The success of this type of transaction in the L.A. area is mostly due to the fact that “single-tenant net-leased demand is at a historic high due to the lack of quality inventory in the market and strong pent-up buyer demand”, said Ed Hanley.