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Fairfield Inn in Milford Trades Hands //New Owner for Reading Apartment Building //Beth Israel Buys Needham Office Building //Mixed-Use in Lawrence in $3.4M Deal //Allston Office Building in Boomerang Deal // Fairfield Inn in Milford Trades Hands //New Owner for Reading Apartment Building //Beth Israel Buys Needham Office Building //Mixed-Use in Lawrence in $3.4M Deal //Allston Office Building in Boomerang Deal // Fairfield Inn in Milford Trades Hands //New Owner for Reading Apartment Building //Beth Israel Buys Needham Office Building //Mixed-Use in Lawrence in $3.4M Deal //Allston Office Building in Boomerang Deal //

Flurry of East Coast Net-Leased Sales Crest $51 Million

July 22, 2014 — By Joe Clements

ENFIELD, CT — From Maine to Florida and various venues in between, it has been a busy start to 2014 for the Marcus & Millichap brokerage team led by Robert Horvath and Todd Tremblay, and the group’s efforts crystallized over the past week in the closing of nine netleased deals carrying a total consideration of $51.6 million. The big ticket assets were just south of Daytona Beach in a BJ’s Wholesale Club ($15.1 million) and LA Fitness Center ($17.1 million), while three of the listings were here in Connecticut. The final two were a 7,925-sf Napa Auto Parts in Windham, ME, and AutoZone unit in Michigan, properties which yielded $1.34 million and $2.44 million, respectively, in separate exchanges.

“It has really come into its own as an asset class,” Horvath relays of net leased CRE in acknowledging the first half of 2014 has continued the surge of momentum enjoyed over the prior two years when the team posted record years. They now appear headed for a third with more than three dozen properties presently under contract along the Eastern Seaboard and into Texas even after the mid-year purge. “We are fortunate there are lots of people in this space, and it is busy in markets everywhere we (operate),” says Horvath. “We are swamped right now.” The Sunshine State negotiations were conducted on behalf of a North Carolina developer, Collette Associates, who also retained Horvath and Tremblay to peddle two retail plazas next to the BJ’s and LA Fitness that are located in Port Orange. The pair has previously brokered similar deals on the upper-end of the net-leased perspective, last year bringing in $17 million for Boston developer William Thibeault in his disposition of the Revere BJ’s Wholesale Club in Revere. “There was a lot of action” on the Florida listings, says Horvath, crediting deal size as one factor attracting suitors.

Back in New England, two Connecticut bank branches were also popular listings, with Webster Bank in Enfield fetching $5.8 million and Santander Bank in Wethersfield changing hands for $3.1 million. Also, the 13,225-sf CVS Pharmacy in Montville cashed out at a healthy $6.58 million. Built in 2007, the latter property was pitched with 18 years term remaining, an element Horvath says was wellreceived by stability minded investors, and he explains it also benefits from a solid demographic in the southern Connecticut area where more than 55,000 people reside in a five-mile radius, a constituency whose median household income is $59,697. “They do really well there,” says Horvath of the pharmacy chain, also crediting multiple entrance/exit points along New London Turnpike where the 13,225-sf store was constructed in 2005.

Having two premier lending institutions on the tenant roster made the Connecticut bank opportunities easy to peddle, says Horvath, and it appears Webster Bank is there to stay at 50 Freshwater Blvd. where it has been a fixture since the 6,825-sf branch opened in 1988 on a 2.1-acre parcel set along Enfield’s main retail corridor. Renewed in 2007, the current triple-net lease extends to March 2027, with 15 percent rental increases every five years.

At 35 years old, the Wethersfield property is longer in the tooth than the Enfield listing, plus has a double-net agreement versus triple-net, but the 10,375-sf store still managed to hit its pricing target and trade at a capitalization rate of 6.0 percent. Horvath cites its “highly visible location” at 1221 Silas Deane Hwy. as one attraction, with vehicular traffic of 25,000 per day, while Santander also just extended its lease there for another 10 years.

In their other New England commitment wrapping up the midyear, Marcus & Millichap’s client secured full asking price for the Windham Napa store at 812 Roosevelt Trail in this Portland suburb. It equates to $169.62 per sf, and carries a capitalization rate of 6.25 percent. Developed in 1996, the property is backed by a 10.5-year lease with rent increases of 7.5 percent every five years. There is a quartet of five-year options after the existing term expires.

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