LOS ANGELES-GC Net Lease, a non-traded REIT sponsored by locally Los Angeles-based Griffin Capital Corp., has acquired a 100% leased printing facility at 380 W. 37th St. in Loveland, CO for $11.85 million at a cap rate described as north of 10%. The property, which comprises 169,816 square feet, is leased to and occupied by World Color (USA) LLC under a long term triple-net lease guaranteed by World Color’s parent, New York Stock Exchange-listed Quad/Graphics Inc., the world’s second-largest printing company.

Kevin Shields, CEO of Griffin, noted that the $11.85 million purchase price compared favorably with two recent lenders’ appraisals ranging between $12.4 million and $12.6 million. "The reason we secured such a great price advantage was due to our ability to act quickly and close by year end,” Shields said. The acquisition closed on Dec. 30, two weeks after going under contract on Dec. 17.

Commenting further on the cap rate, Shields said that, on a leveraged basis, it generates a cash-on-cash return to the REIT of over 10.6%. "This return is substantially accretive to our REIT investors relative to our current distribution rate,” Shields continued. Michael Escalante, Griffin’s chief investment officer, describes the cap rate as approximately 10.26%.

The latest acquisition is an example of the “mission critical,” single-tenant, office and industrial properties―net-leased to creditworthy corporate tenants―that GC Net Lease focuses on in its acquisition efforts. The Quad/Graphics Property is located on 15 acres of land in Loveland, approximately 45 miles north of Denver and 20 miles north of Boulder. The site is just west of Interstate 25, northern Colorado’s primary north-south freeway, which connects Loveland to Denver and other major cities in the region.

Griffin believes the property is mission-critical to the tenant for several reasons: It is the tenant’s only dedicated directory printing facility in the western US, serving markets as far west as Hawaii. Also, the printing presses are operated 24 hours a day, seven days a week. In addition, an adjacent private rail spur facilitates daily delivery via rail car of oversized paper rolls to feed the three state-of-the-art printing presses housed at the property. The property has been expanded on a number of occasions since being built in 1986 and has ample undeveloped area around the improvements to accommodate the tenant’s future growth.