LOS ANGELES—The Kanin Family Trust has purchased the building housing a dog boarding facility called Pooch Hotel, a brand owned by Petco, from 1240 Palmetto LLC for $11.1 million, GlobeSt.com reports exclusively. The family trust purchased the building as part of a 1031 exchange, and plans to use it as a leased investment.
The two-story, 18,000-square-foot property is located at 2250 Barrington Ave. in West Los Angeles. “The West L.A. commercial market is high barrier to entry level market with few investment opportunities,” Mollie Shea Dietsch, a broker at Lee & Associates Commerce office who represented the buyer in the transaction, tells GlobeSt.com. “The tenant Petco provided national credit and allowed the buyer to diversify from residential investment to retail.”
According to Dietsch, all property types on the west side are in demand, largely due to “low interest rates, low cost of capital and investors looking to create yield on available cash.” For similar property types to this sale, she adds that caps rates have shrunk over the past 12 months from the mid 5% range to the mid 4% range.
The Kanin Family Trust is not the only buyer utilizing the 1031 exchange for property purchases. There has been a recent uptick in 1031 exchanges, confirmed by Dietsch, who says, “Market demand has had a higher volume of sales transactions and investors have used the protection of the 1031 to allow for additional investments.” Other recent 1031 transaction reported by GlobeSt.com include The Festival Cos. of Los Angeles‘ purchase of a Sherman Oaks shopping center for $16.8 million and a local family investor who purchased the Keswick Apartments as part of the upleg on a 1031 exchange.