LOS ANGELES-A locally based investor has acquired a portfolio offive NNN-leased Goodyear and Just Tires stores in the Southeastdespite a lack of operating history at two of the newly builtlocations and other challenges, according to Century City-basedVerona Capital Markets, which arranged the $7.6 million acquisitionloan for the portfolio. Edward Kim, VCM principal, points out thatthe financing presented a number of challenges, among them “thenon-investment grade nature of the tenant, specialty use nature ofthe collateral, above market rents and lack of operating historyfor two of the stores that were newly constructed.”

Kim, who arranged the financing along with VCM Associate MichaelWeiner, reports that the locally based high-net-worth investoracquired the portfolio in connection with a 1031 exchange. Veronaobtained the financing from a private mortgage fund based on theEast Coast, arranging a non-recourse, fixed-rate loan with 30 yearamortization, which represented approximately 63% of theacquisition cost.

Kim notes that VCM was able to mitigate the lender’s concerns byhighlighting Goodyear’s long-term, corporate, NNN leases—none ofwhich are scheduled to expire during the loan term—as well as theborrower’s equity in the transaction and the fact that eachproperty was built to suit for the tenant. In addition, each of theproperties is located along a major retail corridor with hightraffic counts and is surrounded by an affluent customer base, Kimadds.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.