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.

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