CITY OF INDUSTRY, CA-Griffin Capital of Los Angeles has acquired the 76,109-sf Superior Nissan of Puente Hills auto dealership from Superior Nissan for $24.7 million in a tenant-in-common deal, with Superior signing a 20-year, triple-net lease to occupy the entire 76,109 sf. Kevin Shields, president of Griffin Capital, tells GlobeSt.com that this is the first time a Griffin TIC group has acquired an auto dealership.

The transaction is believed to be one of the first in the TIC industry in which the underlying property is an auto dealership. "It's an atypical product type for us," explains Shields, whose firm primarily acquires office and industrial properties and has assembled a portfolio of approximately seven million sf.

However, Shields calls the Superior Nissan dealership "perfect for the TIC market" for a number of reasons. The property "is just a great piece of real estate," he says, and Superior is a quality credit tenant that is ranked among the 15 highest-volume Nissan dealers in the US.

The Superior property, at 17320 Gale Ave., is one of six auto dealerships at the Puente Hills Auto Plaza along the 60 Freeway, which provides both high visibility and the added strength of an auto mall location, Shields says. He adds that the acquisition helps to maintain a balance in the Griffin portfolio, approximately one-third of which the company aims to keep in single-tenant properties.

Griffin will consider "alternative asset classes" other than its traditional office and industrial acquisitions when those properties "satisfy the fundamental investment criteria for our investors," he says. Those criteria he outlines as "absolute preservation of capital, a competitive leveraged cash-on-cash return and some capital appreciation."

Griffin raised $9.1 million in equity from the 27 investors, most of whom were represented by five broker-dealers: 1031 Exchange Options, Independent Financial Group, Welton Street, Pacific West Securities, and MCL Securities. Barclays Capital provided a $15.6 million, 10-year, non-recourse first mortgage loan at a 6.29% interest rate.

The real estate transaction was brokered by Colliers International. Seller Superior Nissan was represented by Michael Ross, Fred Cordova and Steve E. Nanino of Colliers International's Downtown Los Angeles office, with Griffin Capital represented by Eric Lastition of Colliers.

Built in 1993, the Superior Nissan dealership features a three-story commercial building that comprises the car show room, office space, parts storage and car maintenance services. The size of the dealership transaction was another factor that worked in its favor as a TIC acquisition, according to Shields.

TIC buyers can find better deals if they "can get out of the small box market and compete more with institutional buyers as opposed to individual buyers," Shields says. He explains that TIC buyers are hard-pressed to compete for something like a small, individual fast food restaurant site because they face competition from individual 1031 exchange buyers who are willing to pay very low cap rates.

But a TIC buyer competing to acquire a $50-million portfolio of that same property type stands a much better chance of making a deal that makes sense, Shields says. Those larger deals "trade at a wider spread" and typically don't face the competition from small 1031 exchange buyers.