09-12: Hometown Buffet, Shopping centers, Medical office building, Dennys, La petite, Best Buy

Advisory: Just before S&P downgraded the credit rating of the US government, there were various predictions that the interest rates would go up as consequence.  However, recent evidence shows that the interest rates have instead gone down.  A client was recently offered 4.75% interest fixed for 10 yrs, 70% LTV financing for a single-tenant property.  This makes commercial real estate investments very appealing now.  For a 8% cap property, you will receive 8% return on your 30% down payment.  You will also receive 3.25% return on the 70% of money that you borrow from the bank!

1.  Hometown Buffet in Denver, CO: 8613 SF restaurant built in 2002 on 1.44 acres outparcel to a shopping center anchored by Home Depot, Walmart, Sam’s Club, Office Depot, Big 5 Sports, and Ross.  20 yrs corp NNN lease with 12 yrs remaining.  NOI $299K/yr. with 10% rent bump every 5 yrs.  $3.148M. 9.5% cap. 
2. Shopping Center in Milwaukee, WI: 35,412 SF 15-unit shopping center on 4.5 acres lot on a major artery in high income area. 89% leased with 2 avail units.  Current NOI $326K/yr.  $3.85M. 8.5% cap. Upside potential when 100% leased. 
3. AutoZone in North Highland, CA: 6600 SF AutoZone built in 1998 on .52 ac outparcel to a shopping center anchored by Big Lots!, Big 5 Sports, Grocery Depot, dd’s Discount and Family Dollar in Sacramento metro.  Tenant just renewed NNN ease till 2021.  NOI $125K/yr. $1.95M. 6.41% cap. 
4. Strip Mall in Chula Vista, CA: 9194 SF 5-unit strip mall on .63 ac lot right next to I-805 in upper middle class area.  NOI $212K/yr.  $1.921M. 11.06% cap (Note: probably pro forma). 
5. Medical Office Building in Pearland, TX: 10,426 SF medical office building completed in 1996 on 2 acres lot in growing Houston suburbs.  100% leased to 2 medical tenants.  NOI N/A.  Just $995K/yr. 
6. Denny’s in Melbourne, FL: 4675 SF Dennys on .9 acre next to I-95 exit. 100% NNN leased till 2027 to an operator with 52 units.  NOI $99K/yr with 4% rent bump in 2013 and 10% every 5 yrs thereafter.  Store with strong $1.14M in sales revenue.  $1.327M. 7.5% cap. 
7. La Petite Academy in Las Vegas, NV: 6740 SF childcare center built in 1991 on .52 ac lot.  100% NNN lease.  Tenant just renewed 5 yr lease.  NOI $85K/yr. $982K. 9% cap. 
8. Best Buy in Joplin, MO: 30,000 SF single-tenant retail center built in 2001 on 3.89 acres lot across from 100-store Northpark Mall.  15 yrs NNN lease with 5 yrs remaining.  NOI $327K/yr. $3.55M. 9.23% cap.

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