Top 10 Properties Among 300+ on 7/24/09

1. Applebee’s Restaurant in Lewisville, TX: 5911 SF restaurant built in 2005 on 1.14 acres of land across from Vista Ridge Mall just one block from I-35E in a high income Dallas suburb. Long NNN leased with 2% annual rent increases by strong franchisee. NOI $244K/yr. $2.880M. 8.5% Cap.
2. Strip Center in Palm Desert, CA: 5880 SF recently constructed strip center anchored by Starbucks Coffee in fast growing 7 high income area with great access to I-10. 100% NNN leased by recognized tenants: Starbucks Coffee, Quiznos and Verizon Wireless. NOI $218K/yr. $2.655M. 8.23% potential Cap.
3. Shopping Center in McAllen, TX: 30,250 SF shopping center built in 2006 on 4.40 acres of parcel shadow anchored by Target across shopping center anchored by Walgreen’s, Petco, Michael’s and more. 100% NNN leased by credit tenants. NOI $464K/yr. $5.2M. 8.94% Cap.
4. Shopping Center in Hattiesburg, MS: 32,720 SF stable shopping center on 2.72 acres of land anchored by Winn Dixie grocery store at busy intersection. 100% NNN leased. NOI $225K/yr. $2.378M. 9.46% Cap.
5. 1st Choice Storage in Naples, FL: 111,716 SF attractive storage facility on 9.50 acres of land conveniently located near I-75. NOI $337K/yr. $4.8M. 7.04% Cap.
6. Office Building in Lawndale, CA: 3050 SF eye-catching multi-tenant two-story office building constructed in 2005 positioned at highly visible location near the wealthy Manhattan Beach. 100% NNN leased. NOI $462K/yr. $750K. 6.16% Cap.
7. Apartments in San Jose, CA: 15-units attractive apartments on .39 acre lot near Westgate Mall in well off neighborhood. NOI $161K/yr. $2.588M. 6.24% Cap.
8. Retail Center in Los Angeles, CA: 12,500 SF retail center at busy thoroughfare with great long term tenant mix: Coin Laundry, Restaurant, Market and Beauty Salon. NOI $170K/yr. $2.275M. 7.5% Cap.
9. Shopping Center in Fort Worth, TX: 42,400 SF mature shopping center on 4.61 acres of land anchored by Bally’s Fitness Center off of I-30. 83% Leased. NOI $221K/yr. $2.3M. 9.63% Cap. Upside potential when fully leased.
10. Strip Center in Wilmington, CA: 6500 SF recently renovated strip center on .43 acre lot at major signalized intersection. 80% NNN leased. NOI $187K/yr. $2.495M. 7.5% proforma Cap. Upside potential.
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 309 07-23-09

1. Tire & Auto Retail Building in Sugar Land, TX: 7568 SF well maintained retail building constructed in 2003 on 1.46 acres of parcel in fast growing (19.86%) affluent (MHI $115K/yr) southwest of Houston at hard corner location of Hwy-90. NOI $151K/yr. $1.825M. 8.32% Cap.
2. El Pollo Loco Restaurant in Palm Desert, CA: rare 2924 SF newly constructed drive-thru free-standing retail building shadow-anchored by Wal-Mart at high traffic location. 17-yrs remaining on original absolute NNN ground lease (Buyer owns the land). NOI $111K/yr. $1.596M. 7% Cap.
3. Family Dollar Retail Building in Arlington, TX: 9180 SF Family Dollar store built in 2005 on .96 acre lot in fast growing area. 100% NNN leased by recession-resistant tenant. NOI $69K/yr. $948K. 7.27% Cap.
   Annual store sales increasing since store opened.
4. Strip Center in North Hollywood, CA: 9515 SF strip center anchored by 7-Eleven on .45 acre lot immediately adjacent to I-101/134 and 170. 100% NNN leased by good tenant mix: 7-Eleven, Cleaners, KirkMusic Studios, JP Classic, Original Thai and Papa John’s. NOI $280K/yr. $3.960M. 7.09% Cap.
5. Mini-Storage in Charlotte, NC: 48,800 SF storage facility renovated in 2008 on 2.89 acres of land near Route-29. NOI $131K/yr. $1.380M. 9.51% Cap.
6. Bridgestone & Firestone Retail Building in Lake Saint Louis, MO: one-year old 7609 SF retail building next to I-40/61 in St Louis suburb. Long NNN lease by credit tenant. NOI $217K/yr. $2.718M. 8% Cap.
7. Burger King Restaurant in Houston, TX: 2929 SF Burger King Restaurant on .77 acre lot off of I-10. 20-years absolute NNN leased by strong franchisee. NOI $114K/yr. $1.476M. 7.75% Cap.
8. Medical/Office Retail Building in Las Vegas, NV: 29,812 SF 2-story medical/office retail building built in 1997 close to Mountain View Hospital. NOI $422K/yr. $4.5M. 9.38% Cap.
9. Golden Coral Buffet & Grill in San Antonio, TX: 14,039 SF attractive restaurant on 2.16 acres of land at main retail corridor surrounded by many national tenants in close proximity to I-13. Long NNN lease. NOI $399K/yr. $4.895M. 8.15% Cap.
10. Strip Center in Costa Mesa, CA: 6735 SF recently constructed strip center on ..54 acre lot at highly visible location near Hwy-55. 100% NNN by 4-teants: Ace Cash Express, Papa John’s, Thai Tasty Corner and El Chicano. NOI $215K/yr. $3.350M. 6.42% Cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Best 9 Properties Among 399 on 7/22/09

1. Strip center in Austell, GA: 9000 SF 3-yrs old multi-tenant strip center on 1.24 ac outparcel to a Home Depot and across from Walmart in fast growing and strong income Atlanta metro. 100% NNN leased with several national tenants. NOI $246K/yr. $2.9M. 8.5% cap.
2. Burger King in Houston, TX: 4770 SF restaurant on 1.23 acres parcel just off Hwy 59. New 20 yrs absolute NNN lease from a franchisee with 50 locations and over $60M in sales.. NOI $143K/yr. $1.85M. 7.75% cap.
3. Christian Brother Auto in Carrollton, TX: brand new 4790 SF auto center on 2/3 ac parcel in a booming middle upper class in Dallas suburb. New 15 yrs absolute NNN lease. NOI $155K/yr. with 1.5% annual rent bump. $1.823M. 8.5% cap.
4. Jiffy Lube in Omaha, NE: 3113 SF Jiffy Lube built in 2008 on 1/3 acre in the financially happiest state (according to ABC News). New 20 yrs absolute NNN lease by Heartland Auto with 430 locations. NOI $74K/yr with 10% rent bump every 5 yrs. $926K. 8% cap.
5. Walgreens in Jacksonville, FL: 13,905 SF drug store built in 1997 on 1.84 ac hard corner lot. 100% NN corp lease. NOI $176K/yr (note: very low base rent of less than $13/SF gives tenant strong incentive to renew lease). $2.14M. High 8.35% cap.
6. Shopping Center in Palmdale, CA: 69,599 SF shopping center built in 2000 on 6.95 acres parcel across from 1M SF Antelope Valley Mall. 100% NNN leased by Ross and Sport Chalet. NOI $775K/yr. $10.36M. 7.25% cap.
7. Shopping Center in Fort Smith, AR: 198,371 SF neighborhood center anchored by Wal-mart in a middle upper class of Fort Smith (AHI over $90K/yr). 97% leased. NOI $881K/yr. $11M. 8% cap.
8. Shopping center in Phoenix, AZ: 19,818 SF 10-yrs old inline shopping center on 2.21 acres lot in a growing and high income area. Shadow anchored by Albertson Supermarkets and Walgreens. 89% NNN leased. Actual NOI $344K/yr. $3.825M. 9% actual cap. Upside potential when 100% leased.
9. 18-unit Apartments in Martinez, CA: 18-unit apartments on ¼ acre lot in a high income Bay Area city with AHI over $88K/yr. 95% occupied. NOI $100K/yr. $1.295M. 7.77% cap with gross rent multiplier of 7.28.
   
   © Copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 360+ on 07/21/09

1. Burger King in Pearland, TX: 2589 SF restaurant on an outparcel to 1.2 M SF Pearland Lifestyle Town Center in a booming (164% pop growth since 2000!) Houston suburb. 20 yrs absolute NNN ground lease (investor owns land and tenant owns the improvements) by an operator with 35 locations. NOI $85K/yr. with 10% rent bump every 5 yrs. $1.215M. 7% cap.
2. Shopping Center in Oakwood, GA: 27,026 SF shopping center built in 2008. Shadow anchored by Sam’s Club and Wal-mart. Right cross Gainesville and Lanier Technical colleges. 92% NNN leased. NOI $570K/yr. $6.335M. 9% cap.
3. Longhorn Steakhouse in Olathe, KS: 5800 SF restaurant built in 2007 as part of a 85-acre entertainment lifestyle center in the upper middle-class Kansas suburb. 15 yrs absolute NNN ground lease by a national credit tenant: Darden Restaurants, Inc. (NYSE: DRI). NOI $120K/yr with 10% rent bump every 5 yrs. $1.550M. 7.75% cap.
4. MRI Medical center in Montgomery, AL: 4293 SF imaging center built in 2000 next to Baptist Medical Center East, a 150-bed acute care hospital in a fast growing and high income area. 100% NNN corp leased WITH 7 yrs left by MQ Associates, Inc. with 92 imaging centers and a subsidiary of Novant Health (AA- credit). NOI $96K/yr. $1.16M. 8.25% cap.
5. Shell Gas station with carwash and C-store in Elk Grove, CA: gas station with 6-MPDs, 2092 SF C-store and carwash just off hwy 99 in a fast growing middle class Sacramento metro. 104K gallon/month with $19K/month sales from c-store and $6400/month from car wash. $2.3M.
6. Bridgestone Auto Center in Lakeville, MN: 25,580 SF auto center built in 2008 on 3.37 acres lot in a high income suburb of St Paul. 15 yrs NNN corp lease by Bridgestone/Firestone, the #1 Tire Manufacturer. NOI $276K/yr with 10% rent increase every 5 yrs. $3.249M. 8.5% cap.
7. Shell Gas station with carwash and C-store in Danville, CA: gas station with 6-MPDs, 2052 SF C-store and carwash in a affluent city with AHI over $198K/yr. Station pumps 180K gallon/month with $37K/month sales from c-store and $6200/month from car wash. $3.9M.
8. Walgreens in Orange Park, FL: 15,420 SF 7-yrs old drug store on 1.4 acres lot on a hard corner in front of Home Depot in a fast growing upper middle-class Jacksonville metro. Area with limited completion with 39 medical offices and clinics within 3 miles. 100% NN lease with 12 yrs left. NOI $342K/yr. $4.208M. 8.2% cap.
9. Strip Center in Tempe, AZ: 9671 SF retail center on .92 ac lot in a stable area. 100% NNN leased. NOI $109K/yr. $1.225M. 9% cap.
10. Vehicle Related Retail Center in Glendale, CA: 14,791 SF retail center in a high income (AHI $90K/yr) with over 750K residents within 5 miles radius. 15 yrs absolute NNN lease by Earl Scheib, an auto paint body center with 85 locations in the US. NOI $192K/yr. $2.227M. 8.63% cap.
    
    © copyright 2009 Transmercial 2009. All rights reserved.

How Properties Are Selected

Every day there are about 300-350 new retail and office properties between $700K to $15M on the market in all 50 states listed by various companies. Out of these hundreds of listings, only the top 5-10 properties make it to the list that you see on this blog. By focusing on the short list of best properties, you will save time and are more likely to be successful with your investments.



Below are some of the selection criteria:



1. Price range: most investors look for properties between $700K and $15M.

2. Property types: most if not all investors of eFunding want to invest in retail properties and office buildings where tenants sign long term low-risk NNN leases, i.e. tenants pay for property taxes, insurance and maintenance expenses, in favor of landlords. They prefer not to invest in apartments where leases are mostly riskier gross, i.e. landlords pay for taxes, insurance and unpredictable maintenance expenses. Besides, apartment tenants normally don’t have much money which may affect their ability to pay the rent on time.

3. Cap rate: the return of investment must be “reasonable”, e.g. generally higher than the interest rate. The cap rate is typically lower in CA and higher in other states. However cap rate is not everything.

4. Property condition: investors prefer properties with little deferred maintenance.

5. Demographics: the selected properties tend to be in growing, high income and bigger cities/metros as they have better chance to appreciate and easier to find tenants. Besides they are easier to sell if needed.

▪ You won’t see properties in an area where people are moving out, e.g. Detroit downtown. These properties are easy to buy but hard to sell. In addition, it’s hard to get attractive financing, if at all, for these properties.

▪ Properties in a middle of nowhere won’t make it to the lists. These are also easy to buy but hard to sell.

▪ Properties in cities where the average household income is way below the national average, e.g. $28,000/year, also won’t make it to the list as these are most likely high-crime areas.

6. Occupancy: close to 100%.

7. Good Visibility: properties tend to have most if not all units facing the road to show case the tenant businesses. Tenants love visibility. What’s good for tenants is also good for investors.

8. Great locations: properties on a major artery with heavy traffic, near the freeway exit, on corner lot, near a mall, on an outparcel to a shopping center.

9. Land: if land is not included then it does matter how beautiful the property is, it will not be selected. This is the type of property that is easy to buy but hard to sell.

10. Lease Type: most likely NNN leases.

11. Parking spaces: at least 4 spaces per 1000 SF of leasable space.. It’s hard to lease a retail property unless it has sufficient parking spaces.

12. Age: not over 20 yrs old unless the property is well-maintained or recently renovated.

13. Price per square foot: sometimes a property is selected because the price per SF is low, e.g. less than $200/SF for a retail property in California. The main reason for the selection is appreciation potential.

14. Low rent: there is upside potential if the rent is below market. When the leases expire, the rent is adjusted to market rent which increases the value of the property.

15. Financing: sometimes a property may be selected because it offers attractive financing. For example, the seller is willing to carry 80% LTV at low interest rate or buyer can assume a loan at 5.5% interest, fixed for 10 years. This in turn may increase the overall return or cash on cash. On the other hand, a property may be screened out because it is difficult to get reasonable financing. For example, in this tight credit market it is extremely difficult to get financing for a single-tenant mom-and-pop restaurant.

16. Misc: A property could be selected or screened out for other reasons

▪ If a property has a dry cleaner with onsite cleaning, it will not be selected due to potential soil contamination by a chemical called Perc used in the cleaning process.

▪ A property in an affluent Santa Monica, CA could be selected simply because it’s rarely available.

▪ A vacant restaurant in front of a mall in San Francisco Bay Area could make the list because it may have lots of interests from investors in CA.



If you are interested on a particular property and would like additional information, i.e. a brochure, please email to maria@transmercial.com. It’s good idea to provide Maria with:



▪ The date the property was selected (not posted date.) This is on the subject of the post.

▪ Name of the property, e.g. Walgreens in Dallas, TX.



You will notice that the properties are posted 1 week after the date they are selected. The reason for this 1 week delay is we don’t want other companies to take advantage of our research work. If you are an investor and would like to receive the list daily without one week delay, we invite you to join Transmercial investors club. The daily list of best properties is emailed to members by 6PM PST, Monday-Friday. The email also contains a 1-page flyer for each selected properties with picture, address, and a brief description about the properties.



Membership to Transmercial investors club is FREE. Click here for details. Don’t worry; there are absolutely no obligations of anything from you to us for being a member. Of course, we hope that you like our work and will eventually ask us to represent you. However, it’s all up to you as you have no contractual obligations to us for anything.

Top 10 Properties Among 395+ 07/20/09

1. Shopping Center in Orland Park, IL: 15,171 SF recently constructed shopping center shadow-anchored by Aldy/Chase Bank at signalized intersection. 100% NNN leased. NOI $391K/yr. $4.875M. 8.04% Cap.
2. Shopping Center in Fort Worth, TX: 9161 SF shopping center built in 2007 on 1 acre lot across from Burlington Northern National Headquarters with over 5000 employees. 80% NNN leased by Nails Salon, Max Tan, Buffalo Wings and Rings. NOI $177K/yr. $1.875M. 9.45% Cap. Upside potential when fully leased.
3. Strip Center in Salina, KS: 2-years old 6400 SF strip center on .51 acres lot at city’s dominant retail area near I-135. 100% NNN leased to national tenants. NOI $126K/yr. $1.150M. 11% Cap.
4. Firestone Retail Building in Mchenry, IL: 7575 SF one-year old retail building on 1.52 acres of land in growing middle-class Chicago suburbs. Long NNN leased by national tenant. NOI $221K/yr. $2.773M. 8% Cap.
5. Walgreen’s Pharmacy in Fernandina Beach, FL: 13,905 SF well located drive-thru pharmacy built in 1998 on 1.72 acres of parcel across from Food Lion in growing/well-off (AHI $101K/yr within 1-mile radius) area. 100% NNN leased by resistant-recession tenant. NOI $202K/yr. $2.407M. Unusually high 8.40% Cap.
6. EZ Lube in Glendale, CA: 2579 SF aye-catching retail building constructed in 2002 on .35 acre lot near New Americana Mall at major artery. 100% NNN leased. NOI $137K/yr. $1.804M. 7.65% Cap.
7. Days Inn in Palmdale, CA: 89-room well maintained 2 two-story motel with excellent freeway visibility/access near new Regional Hospital. $5.650M.
8. Apartments in Gilroy, CA: 8-units apartments at quiet neighborhood on large corner lot. 100% leased. NOI $69K/yr. $1.350M. 5.18% Cap.
9. Del Taco Restaurant in West Valley, UT: 2800 SF recently constructed retail building on .80 acre lot near new Super Wal-Mart. Long absolute NNN leased by #1 franchisee with more than 510 restaurants in 16 states. NOI $125K/yr. $1.680M. 7.5% Cap.
10. Storage and Office Suites in Morgan Hill, CA: 61,720 SF 2-story Spanish Style storage and office suites on over 2 acres of land in close proximity to Hwy-101. NOI $388K/yr. $3.995M. 9.73 % Proforma Cap.
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 350+ 07/17/09

1. Rite Aid in Galt, CA: brand new 17,272 SF pharmacy on 1.79 acres of land near the proposed Wal-Mart at main road. 20-years NNN leased with rent increases. NOI $435K/yr. $5.117M. 8.5% Cap.
2. Logan’s Roadhouse Restaurant in Fairview Heights, IL: 2-years old 8500 SF restaurant on 1.90 acres of parcel adjacent to St. Clair Square close to Hwy-65. Long NNN corp ground lease (you own the land and the tenant owns the building.) NOI $100K/yr. $1.290M. 7.75% Cap.
3. Walgreen’s Pharmacy in Platte City, MO: brand new 14,490 SF retail building on over 2 acres of parcel about 20 miles from Kansas City in close proximity to I-29. 100% absolute NNN corp leased by recession-resistant tenant. NOI $372K/yr. $4.940M. 7.55% Cap.
4. Senior Housing in Saratoga, CA: 3000 SF charming care home on .31 acre lot in an affluent city in Silicon Valley. NOI $191K/yr. $1.599M. 12% Cap.
5. Shopping Center in Palmdale, CA: 30,845 SF shopping center built in 2001 on 3.39 acres of land shadow-anchored by Target, Lowe’s and Best Buy with excellent tenant mix across Antelope Valley Mall. NNN leases. NOI $755K/yr. $10.425M. 7.25% Cap.
6. Retail Center in Temecula, CA: 10,000 SF attractive retail center constructed in 2000 on 1 acre lot across 1.14M SF Mall. 100% NNN leased by 2 credit tenants. NOI $403K/yr. $4.680M. 8.63% Cap.
7. Advance Auto Parts in Lubbock, TX: brand new 6124 SF retail building on .65 acre pad in fast growing area. 100% NNN corp lease. NOI $107K/yr. $1.340M. 8% Cap.
8. LA Fitness in Hemet, CA: 50,000 SF fitness center built in 2008 on 4.71 acres of land located at prime retail corridor. 100% NNN corp lease. NOI $750K/yr. $9.375M. 8% Cap.
9. Shopping Center in Duluth, GA: 6800 SF shopping center on .80 acre lot in fast growing (18.66%) & well-off (AHI $101K/yr within 3-mile radius) Atlanta metro. 100% NNN lease by 4-tenants. NOI $80K/yr. $950K. 8.5% Cap. Excellent for 1st time investor.
10. Goodyear Retail Building in Las Vegas, NV: one-year old 5874 SF well located retail building in explosive growing (22,489.66%) neighborhood. Long NNN leased by credit tenant. NOI $135K/yr. $1.8M. 7.5% Cap.
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 350+ 7/16/09

1. Shopping Center in San Bernardino, CA: 8608 SF shopping center built in 1980 on .53 acre lot at signalized intersection with excellent visibility. 100% NNN leased by 7 tenants with below market rent. NOI $122K/yr. $1.750M. 7% Cap.
2. Walgreen’s Pharmacy in Alexandria, VA: 14,460 SF pharmacy built in 2008 on 2 acres of parcel at premiere signalized corner location in wealthy (AHI $93K/yr) Washington D.C. metro. 25-years NNN lease. NOI $780K/yr. $10.400M. 7.5% Cap.
3. 18-Units Apartments in Los Angeles, CA: 2-stories apartment building recently renovated with solar panels/security cameras in filled city. NOI $83K/yr. $1,095M. 7.51% Cap.
4. Days Inn Motel/Retail in Stockton, CA: 70-room motel with 2 retail spaces anchored by Quiznos with ample parking, swimming pool and loge lobby ½ block from Fwy-5. Excellent for owner user. $4.3M.
5. Shopping Center in Houston, TX: 14.128 SF shopping center recently renovated on 1.70 acres of parcel across Kroger Supermarkets at heavily trafficked intersection. 100% leased. NOI $152K/yr. $1.8M. 8.5% Cap.
6. Tuffy Auto in Fort Myers Beach, FL: 7200 SF retail building constructed in 2001 in fast growing and high-income area. 100% NNN corp lease. NOI $141K/yr. $1.560M. 9.04% Cap. Recession insensitive business.
7. Neighborhood Center in Mansfield, TX: 31,184 SF unique shopping center built in 2001 on 3.28 acres of land in booming Dallas suburbs. 94% leased by excellent tenant mix: office and medical tenants. NOI $513K/yr. $6.422M. 8% Cap.
8. Retail Building in Watsonville, CA: 7400 SF attractive retail building on .47 acre pad in stable area. Long NNN leased by BMW Yamaha of Santa Cruz County. NOI $167K/yr. $1.950M. 8.61% Cap.
9. Strip Center in Sacramento, CA: 4100 SF 3-tenants strip center near Hwy-50. 100% leased by Seoul Restaurant, Lee’s Hair & Beauty Hour. $899K.
10. Rite Aid in Raleigh, NC: 10,908 SF Rite Aid Pharmacy built in 2001 ideally located at hard corner location along US-401 in a fast growing and high income area. Long NNN lease. NOI $284K/yr. $2.647M. 10.75% Cap.
    
    © Copyright 2009 Transmercial. All rights reserved.

Top 10 Properties Among 380 on 7/15/09

1. Shopping Center in Nashville, TN: 88,500 SF stable shopping center on 8.90 acres of land anchored by Big Lots & Thriftsmart along main thoroughfare. 100% leased at very low rent. NOI $326K/yr. $3.6M. 9% Cap. Just over $40/SF!
2. Tuffy Auto in Rock Hill, SC: 5120 SF retail building constructed in 2008 at hard corner location in fast growing Charlotte suburbs. New 20-years NNN corp lease. NOI $129K/yr. $1.563M. 8.25% Cap.
3. Christian Brothers Automotive in Carrolton, TX: brand new 4790 SF retail building with excellent exposure along dominant traffic corridor. 15-years absolute NNN lease with 1.5% annual rent increases. NOI $155K/yr. $1.937M. 8% Cap.
4. Retail Building in Portland, OR: 7110 SF consisting of two retail building constructed in 1990/1992 with good visibility. NOI $53K/yr. $895K. 8.15% Cap.
5. Strip Center in Yorba Linda, CA: 7345 SF attractive strip center recently renovated at signalized intersection in a high income city in Orange county. 100% NNN leased by 4 tenants. NOI $211K/yr. $2.990M. 7.06% Cap.
6. Walgreens Pharmacy in Orange Park, FL: 13,095 SF Walgreen’s Pharmacy built in 1996 on 2.24 acres of parcel at hard corner location. Long NNN lease till 2016. NOI $245K/yr. $2.920M. 8.4% Cap.
7. Ryan’s Restaurant in North Myrtle Beach, SC: 10,162 SF buffet restaurant on 2.75 acres of land along U.S Hwy-17 in well off (AHI $91K/yr within 1 mile radius) coastal town. Long NNN corp lease. NOI $205K/yr. $2.050M. 10% Cap.
8. Acute Care Hospital in Modesto, CA: 100-bed hospital in fast growing area close to I-99. Long NNN lease. $2.3M. 9% Cap.
9. Shopping Center in Panorama City, CA: 29,607 SF shopping center shadow anchored by Rite Aid across Panorama Mall. 86% leased. NOI $467K/yr. $6.4M. 7.30% Cap on actual income. Upside potential when fully leased.
10. Rite Aid Pharmacy in Marietta, GA: 12,738 SF pharmacy built in 1995 ideally located at hard corner of Marietta Hwy/Manning Rd in booming Atlanta suburbs. 100% NNN leased. NOI $183K/yr. $1.606M. 10.75% Cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Top 10 properties among 375 on 07/14/09

1. Shopping Center in Spokane, WA: 51,614 SF shopping center anchored by Rite Aid, Jo-Ann’s fabrics and Petco in a stable and strong income area. 94% leased. NOI $630K/yr. $7M. 9% cap
2. Shopping center in Harvey, IL: 75,000 SF shopping center on 5.2 acres lot with great frontage and visibility in Chicago metro. Anchored by Harvey Fresh Grocery, Dollar General, Foot Locker, Jackson Hewitt, and Murray’s Auto. 100% leased. NOI $590K/yr. $6.65M. 8.87% cap.
3. Albertson’s Grocery Store in Fort Worth, TX: 64,843 SF grocery store on over 6.3 acres parcel in a fast growing (30%) and high income (AHI $87K/yr) area. 20 yrs NNN lease. NOI $429K/yr with 10% rent bump every 5 yrs. $5.54M. 7.75% cap.
4. Arby’s restaurant in Peoria, AZ: 3100 SF fast-food restaurant built in 2001 on .72 acre pad site to Home Depot and Sears in a fast growing Phoenix metro. 100% NNN leased till 2021 with corp guaranty. NOI $131K/yr. $1.749M. 7.5% cap.
5. Dollar Tree store in Twenty-nine Palms, CA: 15,506 SF single-tenant dollar store built in 2008 on 1.53 acres lot adjacent to Stater Bros. Grocery anchored shopping center. 10 yrs NNN corp lease. NOI $190K/yr. $2.235M. 8.5% cap. Recession resistant tenant.
6. Office building in Campbell, CA: 10,500 SF office building on the busy Bascom Ave. in a high-income (AHI $115K/yr) Silicon Valley metro. Just 1 mile from Good Sam hospital. 95% leased. NOI $239K/yr. $3.195M. 7.5% cap.
7. Strip Mall in Green Bay, WI: 3810 SF strip center on ½ acre lot at a highly visible heavy traffic hard corner. 100% NNN leased by Starbucks and Fedex. NOI $140K/yr. $1.761M. 8% cap.
8. Medical Office building in Lake Forrest, CA: 19,569 SF medical office building on 1.2 acres lot in a affluent are with AHI over $106K/yr. 85% leased. NOI $271K/yr. $3.6M. 7.5% cap.
9. Jiffy Lube in Pearland, TX: 4155 SF Jiffy Lube built in 2008 on 2 acres lot in a fast growing middle-class Houston suburb. 20 yrs absolute NNN lease by the 3rd largest Jiffy Lube franchisee with over 110 locations. NOI $151K/yr with 10% rent bump every 5 yrs. Price reduced to $1.784M. 8.5% cap.
10. Davita Dialysis center in Marriott Slaterville, UT: 5000 SF dialysis center built in 2008 in Salt Lake city metro. 100% NNN leased by DaVita, a national tenant. NOI $88K/yr. $1.054M. 8% cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Top 9 Properties Among 401 on 07-13-09

1. Firestone Retail Building in Laveen, AZ: brand new 7575 SF retail building surrounded by newly constructed residential homes. New 15-years NNN corp lease with 6.25% increases every 5-years. NOI $223/yr. $3.082M. 7.25% Cap.
2. Strip Center in Las Vegas, NV: 3500 SF strip center at major thoroughfare close to Mountain View Hospital/I-95. 100% NNN leased. NOI $114K/yr. $1.630M. 7.05% Cap.
3. Retail building in Bakersfield, CA: 11,232 SF attractive single tenant retail building constructed in 2007 on .85 acre lot adjacent to 1.1 million square feet Northwest Promenade shopping center anchored by Walmart, Target, Home Depot, Best Buy Kohls and Michaels. Long NNN leased till 2017 by Party City, the largest party supply company with over 500 stores . NOI 255K/yr. $3M. 8.5% Cap.
4. Taco Bell in Schaumburg, IL: 2700 SF Taco Bell retail building near 2.244 million SF Woodfield Mall and I-290. 100% NNN leased by experienced operator with currently 105 locations. 1.5% annual rent increases. NOI $ 72K/yr. $905K. 8.01% Cap.
5. McDonalds in Visalia, CA: 3915 SF beautiful retail building constructed in 2008 on .92 acre lot on busy Dinuba Blvd shadow-anchored by Target/Ross in fast growing area. 19-years remaining on absolute NNN corp ground lease (you own the land and the tenant owns the building.) NOI $113K/yr. $1.886M. 6% Cap.
6. Sweet Tomatoes Restaurant in Henderson, NV: 6112 SF eye-catching restaurant at hard corner location close to Galleria Mall/ I-515. 100% NNN leased. NOI $248K/yr. $3.250M. 7.66% Cap.
7. Strip Center in Sacramento, CA: 12,000 SF 7-tenants strip center built in 2004 on 1.40 acres of land. 100% leased by established businesses. NOI $269K/yr. $3.695M. 7.20% Cap.
8. Shopping Center in Duluth, GA: 65,000 SF shopping center on 1.50 acres of parcel at busy traffic location close to Gwinnet Place Mall. NOI $249M. $3M. 8.30% Cap.
9. CVS Pharmacy in North Las Vegas, NV: 14,613 SF pharmacy across from shopping center anchored by Smith’s grocery store just mites from I-15. 100% NNN leased. NOI $349K/yr. $4.605M. 7.60% Cap.
   
   © copyright Transmercial 2009. All rights reserved.

Top 10 Proeprties Among 300+ on 07-10-09

1. Advance Auto Parts in Lubbock, TX: 6124 SF brand new Auto parts store on 2/3 acre lot. 15 yrs NNN corp lease. NOI $114K/yr. $1.34M. 8% cap. Recession-resistant tenant.
2. 7-11 in Sacramento, CA: 4800 SF retail building on a corner lot. 100% NNN leased by 7-11 Corp. NOI $81K/yr. $1.125M. 7.25% cap.
3. CVS Pharmacy in Atlanta, GA: 10,640 SF drug store on 1.14 acres parcel near I-20. Store with strong sales of over $1000/SF in 2008. 100% NNN leased till 2014. NOI $209K/yr. $2.796M. 7.5% cap.
4. Walgreens in Clovis, CA: 14,490 SF pharmacy built in 2001 next to Save Mart supermarket near Hwy 168 in a high income area in Fresno metro. 100% NNN leased till 2061. NOI $310K/yr. $4.134M. 7.5% cap. Investment grade tenant!
5. Office Building in Colleyville, TX: 27,100 SF 9-yr old office building on 2 acres lot in a fast growing and affluent Dallas suburb with AHI over $168K/yr! 100% leased with below market rent as much as 30%. NOI $254K/yr. $2.9M. 8.76% cap. Only $107/SF. Upside potential!
6. Apartment in Santa Clara, CA: 15-unit apartment in a high income Silicon Valley with AHI over $100K/yr. NOI $142K/yr. $2.325M.
7. Country Inn & Suites in Tempe, AZ: 139-unit hotel on 2.38 acres parcel with easy access to I-10 in Phoenix metro. NOI $640K/yr. $6.4M. 10% cap.
8. Retail Center in Stockton, CA: 17,163 SF retail center on 1.73 acres parcel with excellent visibility. 100% NNN leased. NOI $281K/yr. $4.2M. 6.7% cap. Buyer to assume $2M loan at low 5.93% interest.
9. Self Storage Facility in Rialto, CA: 770 unit mini-storage built in 2007 on 4.75 acres of land in a fast growing (39%) and high income (AHI $79K/yr) San Bernardino county. Facility with cameras, sprinklers and little competition. $6.995M.
10. Medical Building in Kissimmee, FL: 4972 SF 4-yrs old medical building just a block away from Osceola Regional medical center in a fast growing Orlando metro. 100% leased. NOI $95K/yr. $1.065M. 9% cap.
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 345 on 7/09/09

1. Shopping Center in Tallahassee, FL: 97,172 SF shopping center built in 1994 on 9.20 acres of land. Anchored by Office Depot, Cato Fashions, Beall’s Outlet and shadow-anchored by Super Wal-Mart along Hwy-90. 80% leased. NOI $508K/yr. $5.460M. 9.25% Cap.
2. Strip Center in Rocklin, CA: 12,726 SF 8-unit newly constructed strip center surrounded by new commercial/residential development in high income (AHI $83K/yr) Sacramento suburbs. Proforma NOI in 2011 of $236K/yr. $2.3M. Proforma cap of 10.23% in 2011. Only $180 per SF.
3. Retail Center in Sacramento, CA: 7,000 SF stable retail center with excellent visibility along busy thoroughfare near Florin Mall. Leased by 5 stable tenants. $2.5M.
4. Medical Office in Springfield, OR: 8018 SF medical office on .60 acre lot next to McKenzie-Willamette Medical Center. 100$ NNN leased. NOI $108K/yr. $1.395M. 7.5% Cap.
5. Cho Saigon Shopping Center in Houston, TX: 16,864 SF attractive shopping center built in 2001 on 1.56 acres of land near Hwy-6. 100% NNN leased. NOI $204K/yr. $2.4M. 8.50% Cap.
6. Kindercare Childcare Center in Westminster, CO: 6016 SF retail building on .70 acre lot in growing/wealthy North of Denver outskirts. 100% NNN corp lease. NOI $75K/yr. $937K. 8.02% Cap.
   Tenant has been successful at this location for 24 years
7. Strip Center in Midlothian, VA: 4935 SF high quality constructed strip center built in 2007 on .94 acre lot located on one of Richmond’s most successful retail corridors. 100% NNN leased by established long term tenants. NOI $164K/yr. $1.990M. 8.25% Cap.
8. Shopping Center in Midlothian, VA: 20,999 SF recently constructed shopping center on 1.65 acres of land at hard corner location in fast growing (59.86%) affluent (AHI $115K/yr within 3-milers radius) Richmond suburbs. 93% NNN leased. NOI $435K/yr. $5.276M. 8.25% Cap.
9. Inline Center in Sauk Village, IL: 9400 SF six-units retail center near I-394 in growing Chicago suburbs. 100% leased. NOI $102K/yr. $1.150M. 8.90% Cap.
10. Medical Building in Richmond, VA: 4-years old 6,580 SF medical building on 3.48 acres of parcel in close proximity to Henrico Doctors Hospital along I-73. 100% leased. $1.3M. 8% Cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Top 10 Retail Among 371 on 07/08/09

1. Retail Building in Santa Clarita, CA: 4,235 SF recently constructed retail building on .75 acre lot adjacent o Super Wal-Mart/Home Depot at premier location. Long NNN leased by Time Warner Cable, a credit tenant. NOI $165K/yr. $2.279M. 7.25% Cap.
2. Jiffy Lube in Bakersfield, CA: 2,000 SF retail building with excellent visibility off of I-178. 20-years NNN leased by experienced operator. 2% annual rent increases. NOI $66K/yr. $754K. 8.75% Cap. Excellent for first time investor.
3. Strip Center in Chicago, IL: 10,978 SF strip center built in 1999 at a signalized intersection. 100% NNN leased by Citibank, Beauty Supply and Cricket. NOI $181K/yr. $2.175M. 8.33% Cap.
4. Retail Center in Houston, TX: 11,997 SF retail center built in 2004 on .93 acre lot across Fiesta Food Mart near I-45. 100% NNN leased. NOI $140K/yr. $1.5M. 9.37% Cap.
5. Retail Pad in Roseville, CA: 4,855 SF 3-tenant eye-catching retail building next to Sam’s Club/Wal-Mart in growing (120.61%) & strong income (AHI $84K/yr) neighborhood along dominant corridor near I-65. 100% leased. NOI $159K/yr. $1.994M. 8% Proforma Cap.
6. Hotel in Las Vegas, NV: 330-room attractive motel built in 1980 across McCarran International Airport. NOI $851K/yr. $9.9M. 8.50% Cap.
7. Shopping Center in Pacoima, CA: 15,498 SF well located shopping center built in 2003 on .81 acre lot with excellent visibility at signalized intersection. 100% NNN leased. NOI $341K/yr. $4.550M. 7.51% Cap.
8. Jiffy Lube in Surprise, AZ: 2500 SF newly constructed retail building in fast growing area. 20-year NNN leased by experienced operator. NOI $142K/yr. 3% annual rent bump. $ 1.635M. 8.75% Cap.
9. Strip Center in Sauk Village, IL: 16,000 SF well located strip center anchored by Ace Hardware. 100% leased by good tenant mix. NOI $173K/yr. $1.990M. 8.70% Cap.
10. Retail Center in El Paso, TX: 6873 SF retail building constructed in 2007 on over 1 acre lot. 100% leased. NOI $187K/yr. $2.210M. 8.50% Cap.
    
    
    © Copyright Transmercial 2009. All rights reserved.

FREE: How to invest in commercial real estate seminar

Date: August 29, 2009

Time: 8:55AM to noon

Location: Transmercial. 1340 Tully Road, suite 307. San Jose CA

Reservation required. Please call Maria at 408-288-5500.

Who should attend this seminar?

- Babyboomers who need additional income to supplement SS benefits.

- Investors who have never invested in commercial real estate.

- Investors who are not happy with yields from CDs.

- Professionals who are looking for second sources of income.

- Investors who are looking for alternative investments other than stocks and

mutual funds.

- Self-directed IRA investors

• Compare commercial vs. residential investment properties.
• Commercial real estate terminology: cap rate, NOI, GLA, etc.
• Which property type should you invest? Shopping strip, Office building, Apartment, or Gas station? Single tenant or multi-tenant properties?
• How to choose a good investment property.
• Investment returns
• When is a best time to invest in commercial real estate?
• National demographic trends
• Where should you invest? In San Jose or somewhere else?
• Leases: gross lease, net lease, & percentage lease. Which one investors prefer?
• Property Management issues.
• What you should know about financing for commercial properties.
• The offer process, due diligence.

Top 10 Retail Among 405 on 07/07/09

1. Shopping Center in Hemet, CA: 12,560 SF newly constructed shopping center on .82 acre lot at hard corner location. 50% leased. $1.790M. 8.70% Cap. Huge potential when fully leased.
2. Strip Center in Mesquite, TX: 34,294 SF well maintained strip center on 2.92 acres of land in growing Dallas metro near Hwy-635. 84% leased to medical/retail and office. NOI $258K/yr. $2.802M. 9.24% Cap. Upside potential.
3. Shopping Center in Desoto, TX: 38,127 SF attractive shopping center on 3.60 acres of parcel in growing middle-class (AHI $65K/yr) Dallas suburbs. 85% NNN leased. NOI $252K/yr. $2.660M. 9.50% Cap on actual income. Upside potential.
4. Strip Center in Mill Creek, WA: 12,906 SF beautiful strip center constructed in 2006 on over 1 acre lot as part of an outdoor mall in an upscale community about 20-miles from Seattle. 100% NNN leased by 7 tenants. NOI $375K/yr. $4.950M. 7.60% Cap.
5. Retail Center in Escondido, CA: 6,600 SF one-year old retail center on .62 acre outparcel to Albertsons supermarket in San Diego metro. Shadow-anchored by Home Depot. 100% NNN leased by Verizon, UPS, Athleticuts and Palm Hawaiian BBQ. NOI $231K/yr. $2.807M. 8.25% Cap.
6. Strip Center in Escondido, CA: one –year old 9,600 SF strip center on .91 acre outparcel to Albertsons supermarket in San Diego metro. Shadow-anchored by Home Depot. 100% NNN leased. NOI $ 259K/yr. $3.146M. 8.25% Cap.
7. Office Building in Flower Mound, TX: 9,170 SF eye-catching office building on over one acre lot in fast growing (35.23%) affluent (AHI $123K/yr within 1 mile radius) Fort Worth/Dallas outskirts. 100% leased. NOI $160K/yr. $2M. 8% Cap.
8. Shopping Center in Wauconda, IL: 78,875 SF shopping center on 6.58 acres of land anchored by ACE Hardware with numerous recent upgrades. 85% leased. NOI $664K/yr. $8M. 8.30% Cap. Enormous potential when fully leased.
9. Advance Auto in Belleville, IL: 7,000 SF retail building constructed in 2003 next to Shop N Save Grocery Store in Saint Louis metro. 100% NNN corp lease. NOI $110K/yr. $1.165M. 9.50% Cap. Recession resistant tenant.
10. Shopping Center in Universal City, TX: 13,800 SF shopping center build in 2008 near Loop-1604 in San Antonio metro. 90% NNN leased. NOI $248K/yr. $3.2M. 7.78% Cap.
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 450+ 07/06/09

1. Apartments in Houston, TX: 16-units nice-looking apartments constructed in 2005 near Texas Southern University in downtown location. 70% leased. NOI $64K/yr. $800K. 8% Cap.
2. Office Building in Fresno, CA: 40,000 SF well-maintained office building on 3.32 acres of land close to Fwy-41/168. 80% occupied by long term tenants.
   Upside potential as tenants are paying below market rents. NOI $344K/yr. $4.2M. 8.20% Cap.
3. Office building in Ontario, CA: 4062 SF mature office building at hard corner location fully occupied by doctors and attorneys. NOI $52K/yr. $745K. 6% Cap.
4. Jiffy Lube in Omaha, NE: 3113 SF retail building constructed in 2008 on .32 acre lot at high traffic location. New 20-yrs absolute NNN lease with 10% increases every 5-yrs. NOI $74K/yr. $926K. 8% Cap.
5. Shopping Center in Charlotte, NC: 46,692 SF well located shopping center built in 1996 on 5 acres of land in fast growing area. 100% NNN leased by 10 tenants anchored by several national tenants: Food Lion supermarket, CVS Pharmacy and US Post Office. NOI $352K/yr. $4.4M. 8% Cap.
6. Retail Building in Weymouth, MA: 17,262 SF retail building on 2.60 acres of parcel anchored by CVS pharmacy with excellent visibility in middle-class (AHI $84K/yr) Boston suburb. NOI $361K/yr. $4.666M. 7.75% Cap.
7. Office Depot in Eugene, OR: 24,978 SF attractive retail building constructed in 1994 on 2.31 acres of land near I-5. 10-yr absolute NNN corp lease. 10% rental increases. NOI $355K/yr. $4.425M. 8.04% Cap.
8. Strip Center in Alameda, CA: 6132 SF eye-catching inline retail center built in 1992 on .62 acre lot shadow-anchored by Lucky supermarket/CVS Pharmacy. 100% NNN leased by Chase, Quiznos Subs and Hair Salon. NOI $212K/yr. $3.1M. 6.83% Cap.
9. Burger King in Valdosta, GA: 2859 SF retail building on .52 acre lot near Valdosta Mall off of I-75. Long NNN corp lease. NOI $87K/yr. $1.173M. 7.5% Cap. Recession-resistant tenant.
10. Strip Center in Duluth, GA: 23,532 SF two-story strip center on 3 acres of land surrounded by upscale residential properties. 100% NNN leased by 13 tenants. NOI $416K/yr. $5.2M. 8% Cap.
    
    
    © copyright Transmercial 2009. All rights reserved.

Top 10 Retail Among 343 on 07/02/09

1. Firestone Retail Building in Omaha, NE: 7575 SF retail building constructed in 2007 on 1.35 acres of land adjacent to Wal-Mart Supercenter and Target in an affluent area with AHI over $111K/yr. 15-years NNN corp lease with increases. NOI $194K/yr. $2.432M. 8% Cap.
2. Wendy’s Restaurant in Port St. Lucie, FL: 2965 SF well located restaurant built in 1997 on 1.26 acres of parcel in growing (25.22%) coastal Florida town along Hwy-1. Long NNN leased by an experienced multi-unit operator. NOI $110K/yr. $1.375M. 8% Cap.
3. Retail Building in Des Plaines, IL: 5385 SF retail building constructed in 2002 fully leased by recession resistant tenant at prime/signalized location in Chicago metro. NOI $101K/yr. $1.015M. 10.01% Cap.
4. Office Building in Greenwood, IN: 45,790 SF 4-stories Class-A recently renovated office building in one of the fastest growing counties in Indianapolis metro. NOI $ 333K/yr. $3.7M. 9% Cap.
5. 8-unit apartments in Long Beach, CA: 4770 SF well maintained apartments just blocks from the beach. NOI $48K/yr. $775M. 6.28% Cap.
6. Shopping Center in Sunnyvale, CA: 18,122 SF inline shopping center on 1.97 acres of land with excellent tenant mix: Restaurants, Hair Cut Salon, Cleaners, Coffee Shop, Wine Shop, Chiropractor and Storage. NOI $413K/yr. $5.675M. 7.3% proforma Cap.
7. Jiffy Lube in Walnut Creek, CA: 2938 SF well located retail building at high traffic & high income (AHI over $114K/yr) location. New 10-years NNN corp lease. NOI $92K/yr. $1.362K/yr. $6.8% Cap.
   Tenant has been operating since 1989 at this location.
8. Office Building in El Camino Real (Santa Clara, CA): 4956 SF 2-story attractive office building remodeled in 2006/2007 with 2-years old roof. NOI $123K/yr. $1.299M. 9.5% proforma Cap.
   Ideal for a partial owner/user
9. Strip Center in Stockton, CA: 7293 SF retail building constructed in 2008 on 1.32 acres of land across Walgreens/Costco at signalized intersection. 100% NNN leased by national tenants. NOI $243K/yr. $3.490M. 7% Cap.
10. Office building in Provo, UT: 18,400 SF beautiful office building on over 1 acre lot in middle-class ($81K/yr) area near I-189. 88% NNN leased. NOI $205K/yr. $2.4M. 8.56% Cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 380+ 7/01/09

1. Michaels in Beaumont, TX: 25,725 SF retail building in growing/middle-class area bordered by many national tenants near I-10 & East of Houston. 100% NNN leased by public tenant. NOI $228K/yr. $2.950M. 7.75% Cap.
2. Shopping Center in Princeton, NJ: 21,905 SF shopping center on 1.45 acres of land along highly traveled commuter corridor in affluent neighborhood (AHI $168K/yr within 5-mile radius) about ½ mile from the prestigious Princeton University. 100% leased with long term tenants. NOI $385K/yr. $4.7M. 8.20% Cap.
3. Office Building in The Woodlands, TX: 15,000 SF beautiful office building on 1.88 acres of land in close proximity to Woodlands Mall. Fast growing & affluent Houston suburb with AHI over $119K/yr. 95% leased. NOI $323K/yr. $3.650M. 8.87% Cap.
4. Sonic in Beaumont, TX: 1538 SF restaurant built in 2000 located at hard corner location. 20 yrs absolute NNN leased by strong franchisee currently operating over 20 locations. NOI $108K/yr. $1.128M. 9.59% Cap.
5. Office Building in Santa Ana, CA: 20,539 SF mature office building on .78 acre lot currently 42 suites which houses numerous small to mid size businesses. Densely populated with over 620K residents within 5 miles. 90% leased. $2.050M. Less than $100/SF!
6. Retail Building in Houston, TX: 6116 SF attractive retail building renovated in 2000 with good visibility in downtown location with great demographics (AHI over $103K/yr). NOI $103K/yr. $1.3M. 8% Cap.
7. Taco Bell in Cedar Rapids, IA: 3000 SF fast-food restaurant constructed in 2001 on .90 acre lot shadow-anchored by Wal-Mart Supercenter. Brand new 15-yrs absolute NNN lease with 8% rent increases every 5-yrs. NOI $98K/yr. $1.225M. 8% Cap.
8. El Pollo Loco in Atlanta, GA: 3,210 SF restaurant built in 2007 situated as signalized intersection in fast growing area. Long NNN ground leased (you own the land) by experienced franchisee. NOI $85K/yr. $1.134M. 7.5% Cap.
9. Burger King in Dallas, TX: 2696 SF retail building constructed in 2002 on .86 acre lot off of Loop-12. Long 20-yrs NNN leased with 2% annual rent increases. $2.088M. 7.90% Cap.
10. Strip Center in Lyons, IL: 5450 SF strip center shadow-anchored by Walgreens at signalized intersection. 100% NNN leased by Starbucks, Jimmy Johns, T-Mobile and Alternative Medi-Spa. NOI $171K/yr. $2.199M. 7.82% Cap.
    
    © Copyright Transmercial 2009. All rights reserved.

Top 10 Properties Among 333 on 6/30/09

1. Quality Inn in Salinas, CA: 32-room motel completely remodeled in 2007 on .60 ac lot near Hwy-101. NOI $236K/yr. $3.590M. 8% Cap.
2. Taco Bueno in Tulsa, OK: 2568 SF nice-looking restaurant constructed in 2007 on over 1 acre lot close to I-44. New 20-yrs NNN corp lease. NOI $78K/yr. $984K. 8% Cap.
3. Shopping Center in Henderson, NV: 212,000 SF upscale shopping center on 7.78 acres of land shadow-anchored by Super Kmart at premier location with two huge monument signs providing extra tenant exposure. 83% leased. NOI $1,180M. $13,115M. 9% Actual Cap. Huge potential when fully leased.
4. Shopping Center in Houston, TX: 11,242 SF nice-looking shopping center built in 2007 on 1.16 acres of parcel at signalized intersection with good tenant mix: PLS Check Cashers, L&Y Insurance, NYNY Mattress, Sprint, KJC Auto Loans, Cleaners and HealthReady. 100% NNN leased. NOI $215K/yr. $2.5M. 8.61% Cap.
5. Burger King in Lewisville, TX: 3756 SF retail building remodeled in 2000 on .59 acre lot with excellent throughway visibility near I-77. New 20-yrs absolute NNN leased by strong franchisee. 2% rent increases. NOI $132K/yr. $1,670M. 7.90% Cap.
6. Medical Building in Indianapolis, IN: brand new 9800 SF urgent care center on 1.50 acres of parcel on prime retail location. Long NNN leased by Concentra Heath Services. NOI $213K/yr. $2.5M. 8.53% Cap.
7. Taco Bell in Evergreen, CO: 2272 SF attractive retail building on 1.19 acres of land in prosperous (AHI $146K/year) Denver suburbs off of Hwy-74. Long absolute NNN lease. NOI $138K/yr. $1.386M. 10% Cap.
8. Apartments in Martinez, CA: 20-units recently renovated apartments on .75 acre lot near Fwy-680. 98% leased. NOI $191K/yr. $2.651M. 7.22% Cap.
9. Walgreens in Everett, WA: 15,120 SF Walgreen’s Pharmacy built in 2000 on 1.50 acres of parcel at highly visible location. Long NNN lease. NOI $589K/yr. Price reduced to $7.5M. 7.86% Cap.
10. Shopping Center in Greensboro, NC: 24,949 SF well located shopping center on 3.36 acres of land. Short Sale. NOI $250K/yr. $2.499M. 10% Cap.
    
    
    © Copyright Transmercial 2009. All rights reserved.

2009 Complete Guide for Restaurant Real Estate Investments

2009 Complete Guide for Restaurant Real Estate Investments

Restaurants are a favorite commercial property for many investors because:

1. Tenants often sign very long term, e.g. 20 years absolute triple net (NNN) leases. This means besides the rent, tenants also pay for property taxes, insurance and all maintenance expenses. The only thing you have to pay is the mortgage, so your monthly cash flow is very predictable. There are no landlord responsibilities so you have time to do what is important to you, (e.g. to retire). All you do is take the rent check to the bank. This is one of the key benefits in investing in a restaurant or single-tenant property.
2. Whether rich or poor, people need to eat. Americans are eating out more often as they are too busy to cook and cleanup the pots & pans afterwards which often is the worst part! According National Restaurant Association, the nation’s restaurant industry currently involves 937,000 restaurants and is expected to hit $537 billion in sales in 2007, compared to just $322 billion in 1997 and $200 billion in 1987 (in current dollars). In 2006 for every dollar Americans spend on foods, 48 cents were spent in restaurants. As long as there is civilization on earth, there will be restaurants! So you feel comfortable that the property is always in high demand.
3. You know your tenants will take very good care of your property because it’s in their best interest to do so. Few customers if any want to go to a restaurant that has a filthy bathroom or trash in the parking lot.

However, restaurants are not created equal, from an investment viewpoint.

Franchised versus Independent

One often hears that 9 out of 10 new restaurants will fail in the first year; however, this is just an urban myth as there are no studies with such conclusion. There is only a study by Associate Professor of Hospitality, Dr. H.G. Parsa of Ohio State University who tracked new restaurants located in the city Columbus, Ohio during the period from 1996 to 1999 (Note: you should not draw the conclusion that the results are the same everywhere else in the US or during any other time periods.) Dr. Parsa observed that seafood restaurants were the safest ventures and that Mexican restaurants experience the highest rate of failure in Columbus, OH. His study also found 26% of new restaurants closed in the first year in Columbus, OH during 1996 to 1999. Besides economic failure, the reasons for restaurants closing include divorce, poor health, and unwillingness to commit immense time toward operation of the business. Based on this study, it may be safe to predict that the longer the restaurant has been in business, the more likely it will be operating the following year so that the landlord will continue to receive the rent.

For franchised restaurants, the franchisee has to pay a one-time franchisee fee about $30 to $50 thousand and on-going royalty between 4% to 12.5% of sales revenue. In turn, the franchisee receives training on how to set up, and operate a proven and successful business without worrying about the marketing part. As a result, a franchised restaurant gets customers as soon as the open sign is put up. The king of franchised restaurants is the fast-food chain, McDonalds with 30,823 locations (about 14,000 in the US) as of 2006 with an average $2M in revenue per US location. McDonalds currently captures 46% market share of the $58.88 billion US fast-food market. Distant behind is Burger King with 14.3% of the market share. Fast-food chains tend to detect new trends faster. For example, they are open as early as 5AM as Americans are increasingly buying their breakfasts earlier. They are also selling more café latte to compete with Starbucks.

Independent restaurants will take a while to for customers to come in and try the food. Their business is especially tough in the first 12 months of opening, especially to those whose owners have not had a proven track record. So in general, mom and pop restaurants are a riskier investment for you because revenue is initially weak. If you choose to invest in a non-brand name restaurant, make sure the return is proportional to the risks that you will be taking.

Sometimes it is not easy for you to tell if a restaurant is a brand name or non-brand name. Some restaurant chains only operate, or are popular in a certain region. For example, Johnny Carino’s restaurant is a very popular Italian restaurant chain in Texas and Georgia but there is only one in California as of 2007. Brand name chains tend to have a website listing all the locations plus other information. So if you can find a restaurant website from Google or Yahoo you can quickly discern if an unfamiliar name is a brand name or not. You can also obtain basic consumer information about almost any chained restaurants in the US on www.wikipedia.org.

Lease & Rent Guaranty

The tenants often sign a long term absolute triple net (NNN) lease. This means besides the base rent they also pay for all operating expenses: property taxes, insurance and maintenance expenses. For investors, the risk of maintenance expenses uncertainty is eliminated and their cash flow is predictable. The tenants may also guarantee the rent with their own or corporate assets. Therefore, in case they have to close down the business, they will continue paying rent for the life of the lease. Below are a few things that you need to know about the lease guaranty:

1. In general, the stronger the guaranty the lower the return of your investment. The guaranty by McDonalds Corporation with a strong “A” S&P corporate rating of a public company is much better than a small corporation owned by a franchisee with a few restaurants. Consequently, a restaurant with a McDonalds corporate lease normally offers low 6-7% cap (return of investment in the 1^st year of ownership) while McDonalds properties with a franchisee guaranty may offer 6.5-7.5% cap.
2. Sometimes a multi-location franchise will form a parent company to own all the restaurants. Each restaurant in turn is owned by a single-entity Limited Liabilities Company (LLC) to shield the parent company from liabilities. So the rent guaranty by the single-entity LLC does not mean much as it does not have much assets.
3. A good, long guaranty does not make a lemon a good car. Similarly, a strong guaranty does not make a lousy restaurant a good investment. It only means the tenant will make every effort to pay you the rent. So don’t judge a property primarily on the guaranty.
4. The guaranty is good until the corporation that guarantees it declares bankruptcy. At that time, the corporation reorganizes its operations by closing locations with low revenue and keeping the good locations, (i.e. ones with strong sales). So it’s more critical for you to choose a property at a good location. If it happens to have a weak guaranty, (e.g. from a small, private company), you will get double benefits: on time rent payment and high return.

Location, Location, Location

A lousy restaurant may do well at a good location while those with a good menu may fail at a bad location. A good location will generate strong revenue for the operator and is primarily important to you as an investor. It should have these characteristics:

1. High traffic volume: this will draw more customers to the restaurant and as a result high revenue. So a restaurant at the entrance to a regional mall or Disney World or a major shopping mall is always desirable.
2. Good visibility & signage: high traffic volume must be accompanied by good visibility from the street. This will minimize advertising expenses and is a constant reminder for diners to come in.
3. Ease of ingress and egress: a restaurant located on a one-way service road running parallel to a freeway will get a lot of traffic and has great visibility but is not at a great location. It’s hard for potential customers to get back if they miss the entrance. In addition, it’s not possible to make a left turn. On the other hand, the restaurant just off freeway exit is more convenient for customers.
4. Excellent demographics: a restaurant should do well an area with a large, growing population and high incomes as it has more people with money to spend. Its business should generate more and more income to pay for increasing higher rents.
5. Lots of parking spaces: most chained restaurants have their own parking lot to accommodate customers at peak hours. If customer cannot find a parking space within a few minutes, there is a good chance they will skip it and/or won’t come back as often.
6. High sales revenue: the annual gross revenue alone does not tell you much since larger--in term of square footage--restaurant tends to have higher revenue. So the rent to revenue ratio is a better gauge of success. Please refer to rent to revenue ratio in the due diligence section for further discussion.
7. High barriers to entry: this simply means that it’s not easy to replicate this location nearby for various reasons: the area simply does not have any more developable land, or the master plan does not allow any more construction of commercial properties, or it’s more expensive to build a similar property due to high cost of land and construction materials. For these reasons, the tenant is likely to renew the lease if the business is profitable.

Financing Considerations

In general the interest rate is a bit higher than average for restaurants due to the fact that they are usually single-tenant properties. To the lenders, there is a perceived risk because if the restaurant is closed down, you could potentially lose 100% of your income from that restaurant. Lenders also prefer brand name restaurants. In addition, some lenders will not loan to out-of-state investors especially if the restaurants are located in smaller cities. So it may be a good idea for you to invest in a franchised restaurant in major metro areas, e.g. Atlanta, Dallas. In 2009 it’s quite a challenge to get financing for sit-down restaurant acquisitions, especially for mom and pop and regional restaurants. In early 2009, it was almost impossible to find any lenders in the US willing to finance regional restaurant purchases due to the tight credit market. However, things seem to have improved a bit.

When the cap rate is higher than the interest rate of the loan, e.g. cap rate is 7.5% while interest rate is 6.5%, than you should consider borrowing as much as possible. You will get 7.5% return on your down payment plus 1% return for the money you borrow. Hence your total return (cash on cash) will be higher than the cap rate. Additionally, since the inflation in the near future is expected to be higher due to rising costs of fuel, the money which you borrow to finance your purchase will be worth less in the following years due to inflation. So it’s even more beneficial to maximize leverage now.

Due Diligence

You may want to consider these factors before deciding to go forward with the purchase:

1. Tenant’s financial information: The restaurant business is labor intensive. The average employee generates only about $55 thousand in revenue yearly. The cost of goods, e.g. foods and supplies should be 30-35% of revenue; labor and operating expenses 45-50%; rent about 7-12%. So do review the profits and loss (P&L) statements, if available, with your accountant. In the P&L statement, you may see the acronym EBITDAR. It stands for Earnings Before Income Taxes, Depreciation (of equipment), Amortization (of capital improvement), and Rent. If you don’t see royalty fees in P&L of a franchised restaurant or advertising expenses in the P&L of an independent restaurant, you may want to understand the reason why. Of course, we will want to make sure that the restaurant is profitable after paying the rent. Ideally, you would like to see net profits equal to 10-20% of the gross revenue. In the last few years the economy has taken a beating so restaurants revenue has dipped. So don’t get panic if you to see around 3-4% reductions in gross revenue. This seems to have affected most if not all restaurants everywhere. In addition, it may take a new restaurant several years to reach potential revenue target. So don’t expect new locations to be profitable right away even for chained restaurants.
2. Rent to revenue ratio: this is the ratio of base rent over the annual gross sales of the store. It is a quick way to determine if the restaurant is profitable, i.e. the lower the ratio, the better the location. As a rule of thumb you will want to keep this ratio less than 10% which indicates that the location has strong revenue. If the ratio is less than 7%, the operator will very likely make a lot of money after paying the rent. The rent guaranty is probably not important in this case.
3. Parking spaces: restaurants tend to need a higher number of parking spaces because most diners tend to stop by within a small time window. You will need at least 8 parking spaces per 1000 Square Feet (SF) of restaurant space. Fast food restaurants may need about 15 to 18 spaces per 1000 SF.
4. Termination Clause: some of the long term leases give the tenant an option to terminate the lease should there be a fire destroying a certain percentage of the property. Of course, this is not desirable to you if that percentage is too low, e.g. 10%. So make sure you read the lease.
5. Price per SF: you should pay about $200 to $500 per SF. In California you have to pay a premium, e.g. $1000 per SF for Starbucks restaurants which are normally sold at very high price per SF. If you pay more than $500 per SF for the restaurant, make sure you have justification for doing so.
6. Rent per SF: ideally you should invest in a property in which the rent per SF is low, e.g. $2 to $3 per SF per month. This gives you room to raise the rent in the future. Besides, the low rent ensures the tenant’s business is profitable, so he will be around to keep paying the rent. Starbucks tend to pay a premium rent $2 to 4 per SF monthly since they are often located at a premium location with lots of traffic and high visibility. If you plan to invest in a restaurant in which the tenant pays more than $4 per SF monthly, make sure you could justify your decision because it’s hard to make a profit in the restaurant business when the tenant is paying higher rent. Some restaurants may have a percentage clause. This means besides the minimum base rent, the operator also pays you a percentage of his revenue when it reaches a certain threshold.
7. Rent increase: A restaurant landlord will normally receive either a 2% annual rent increase or a 10% increase every 5 years. As an investor you should prefer 2% annual rent increase because 5 years is a long time to wait for a raise. You will also receive more rent with 2% annual increase than 10% increase every 5 years. Besides, as the rent increases every year so does the value of your investment. The value of restaurant is often based on the rent it generates. If the rent is increased while the market cap remains the same, your investment will appreciate in value. So there is no key advantage for investing in a restaurant in a certain area, e.g. California. It’s more important to choose a restaurant at a great location.
8. Lease term: in general investors favor long term, e.g. 20 year lease so they don’t have to worry about finding new tenants. During a period with low inflation, e.g. 1% to 2%, this is fine. However, when the inflation is high, e.g. 4%, this means you will technically get less rent if the rent increase is only 2%. So don’t rule out properties with a few years left of the lease as there may be strong upside potential. When the lease expires without options, the tenant may have to pay much higher market rent.
9. Risks versus Investment Returns: as an investor, you like properties that offer very high return, e.g. 8% to 9% cap rate. And so you may be attracted to a brand new franchised restaurant offered for sale by a developer. In this case, the developer builds the restaurants completely with Furniture, Fixtures and Equipment (FFEs) for the franchisee based on the franchise specifications. The franchisee signs a 20 years absolute NNN lease paying very generous rent per SF, e.g. $4 to $5 per SF monthly. The new franchisee is willing to do so because he does not need to come up with any cash to open a business. Investors are excited about the high return; however, this may be a very risky investment. The one who is guaranteed to make money is the developer. The franchisee may not be willing to hold on during tough times as he does not have any equity in the property. Should the franchisee’s business fails, you may not be able to find a tenant willing to pay such high rent, and you may end up with a vacant restaurant.
10. Track records of the operator: the restaurant being run by an operator with 1 or 2 recently-open restaurants will probably be a riskier investment. On the other hand, an operator with 20 years in the business and 30 locations may be more likely to be around next year to pay you the rent.
11. Trade fixtures: some restaurants are sold with trade fixtures so make sure you document in writing what is included in the sale.
12. Special Considerations for 2009: while fast-food restaurants do well during the downturn, sit-down (non fast-food) restaurants tend to be more sensitive to the recession due to higher prices. These restaurants may experience double-digit drop in year-to-year revenue. As a result, many sit-down restaurants are shut down. And so there are quite a few sit-down restaurants on the market for sale with over 10% cap and long-term absolute NNN leases by regional restaurants, e.g. Smokey Bones BBQ. Some of these are located at super-prime locations which are rarely available during normal markets, e.g. in front of regional malls. This presents an opportunity for investors who see the glass of water as half-full. If a restaurant location in the chain has good revenue such that it survives the toughest times then your investment may have strong upside potential when the economy recovers.

Sale & Lease Back

Sometimes the restaurant operator may sell the real estate part and then lease back the property for a long time, e.g. 20 years. A typical investor would wonder if the operator is in financial trouble so that he has to sell the property to pay for his debts. It may or may not be the case; however, this is a quick and easy way for the restaurant operator to get cash out for good reason: business expansion. Of course, the operator could refinance the property with cash out but that may not be the best option because:

1. He cannot maximize the cash out as lenders often lend only 65% of the property value in a refinance situation.
2. The loan will show as long term debt in the balance sheet which is often not viewed in a positive light.
3. The interest rates may not be as favorable if the restaurant operator does not have a strong balance sheet.
4. He may not be able to find any lenders due to the tight credit market.

You will often see 2 different cash out strategies when you look at the rent paid by the restaurant operator:

1. Conservative market rent: the operator wants to make sure he pays a low rent so his restaurant business has a good chance of being profitable. He also offers conservative cap rate to investors, e.g. 7% cap. As a result, his cash out amount is small to moderate. This may be a low risk investment for an investor because the tenant is more likely to be able to afford the rent.
2. Significantly higher than market rent: the operator wants to maximize his cash out. Investors are sometimes offered high cap rate, e.g. 9%. As a result, the restaurant business at this location may suffer a loss due to higher expenses, i.e. rent. However, the operator gets as much money as possible for his investment, e.g. business expansion. This property could be riskier for you. If the tenant’s business does not make it and he declares bankruptcy, you will have to offer lower rent to another tenant to get your building leased.

About the author:

David V. Tran is the President/Chief Investment Advisor of Transmercial, a commercial real estate brokerage, commercial loan brokerage, property management company in San Jose, CA. His website is www.transmercial.com. He may be contacted at (408) 288-5500. Transmercial does business in all 50 states.

(c) Transmercial 2008-2009.