Hanley Investment Group Real Estate Advisors’ Senior Vice President Jeremy McChesney has completed the sale of three 7-Eleven stores—two located in Los Angeles County and one in Orlando, Fla.
One of the transactions had a record-breaking cap rate of 3.56% for 2016 and $1,823 per square foot. McChesney has sold 15 7-Elevens in the last 16 months, the most 7-Elevens sold by one individual in the U.S. during this period.
“These sales highlight the strong appetite investors have for high quality, investment-grade net-lease properties and investors continued willingness to look in major metros across the country to find them,” said McChesney.
7‑Eleven is the world’s largest convenience store chain operating, franchising and licensing stores in 18 countries. Some 10,500 of the 56,600 7‑Eleven stores worldwide are in North America.
“All three properties had attractive fundamentals including high profile, high traffic, signalized locations, great proximity, ease of access to major thoroughfares, and good demographics,” said McChesney. “They also have corporate-backed leases.”
In Los Angeles County, McChesney completed the sale of a single-tenant corporate-guaranteed 7-Eleven ground lease with over 11 years remaining on the primary term of the lease at 4436 Sepulveda Boulevard in Culver City, Calif. Built in 2012, the 1,481-square-foot 7-Eleven building is situated on a .28-acre parcel at the signalized intersection of Sepulveda Boulevard and Braddock Drive. The purchase price was $2,700,000, representing $1,823 per square foot (PSF) and a cap rate of 3.56%, the lowest cap rate nationwide for a 7-Eleven property that closed in 2016, according to CoStar. McChesney represented both the buyer, a private investor based in Newport Beach, Calif., and the seller, a private investor based in Yorba Linda, Calif.
“This is a great, dense, affluent, infill location in Culver City with 45,000 cars per day (CPD) along Sepulveda Boulevard,” said McChesney. “We negotiated a short 35-day escrow and found the seller’s replacement property while in escrow and closed on the new property two days later, thus preserving his income stream.”
Also in Los Angeles County, McChesney negotiated the sale of a 7-Eleven strip center at 5870 Del Amo Boulevard in Lakewood, Calif. Built in 1983, the 4,960-square-foot, two-tenant building sits on .46 acres at the signalized corner of Del Amo Boulevard and Woodruff Avenue with 54,000 CPD. The purchase price was $3,360,000, representing a cap rate of 4.25% cap rate and $677 PSF. McChesney represented the buyer, a private investor from Yorba Linda, Calif. The seller, private investors in Orange, Calif., was represented by Dave Hunsaker and Chuck Noble of Lee & Associates of Orange, Calif.
“This is another great dense infill location in Los Angeles County. There are 673,595 people residing within five miles of this 7-Eleven,” said McChesney. This is the second time in recent years that Hanley Investment Group has been involved in the sale of this 7-Eleven property.
In Orange County, Florida, McChesney completed the sale of a single-tenant 7-Eleven gas station with six years remaining on the primary term of the lease at 8499 S. John Young Parkway in Orlando. Built in 1998, the 2,950-square-foot 7-Eleven building is situated on 1.16 acres at the signalized corner of S. John Young Parkway and S. Park Circle with 53,000 CPD. The purchase price was $4,500,000, representing a cap rate of 5.56% cap rate and $1,525 PSF. McChesney represented the seller, a private investor based in Hermosa, Calif. The buyer, a local private investor, was represented by Rich Vaaler of Vaaler Commercial Real Estate in Leesburg, Va.
“This was an aggressive closing cap rate for a single-tenant 7-Eleven with a short-term lease at a very high price point,” said McChesney. “We negotiated a short 30-day escrow with the all-cash investor to meet the seller’s exchange requirements.”
With nearly 100 7-Eleven properties trading hands last year, what does McChesney expect for the remainder of the year? “With an AA- credit rating, zero land responsibilities and a lack of quality alternative investments, single-tenant 7-Eleven stores will continue to be one of the most highly sought-after retail investments in today’s market,” McChesney said. McChesney currently has multiple 7-Eleven properties available for sale, including a high profile two-tenant 7-Eleven strip center at the signalized intersection of Robertson Boulevard and Airdome Street in Los Angeles. For more information, visit www.hanleyinvestment.com.