(Save the Date: RealShare Orange County 2012 comes to the Hyatt Regency, Irvine, August 16.)

IRVINE, CA-GlobeSt.com has exclusively learned that Faris Lee Investments has completed the sales of 10 properties occupied by Ruby Tuesday restaurants for a total of $22 million. We also learned that the properties are all located in strong locations, include new, NNN absolute 15-year lease terms and annual rent increases, and were sold at record-breaking cap rates.

Six properties were sold for $12.8 million to a private investor from Southern California. The properties included: a 4,645-square-foot location at 110 Pooler Pkwy. in Pooler, GA; a 5,655-square-foot location at 1410 Old Springdale Rd. in Rock Hill, SC; a 4,658-square-foot property at 7400 Northside Dr. in North Charleston, SC; a 4,959-square-foot property at 210 NC Highway 54 in Durham, NC; a 5,097-square-foot property at 145 Commonwealth Ave. in Wytheville, VA; and a 5,084-square-foot location at 111 Burgess Rd. in Harrisonburg, VA.

Two of the properties were sold to individuals and include a 4,959-square-foot location at 7425 Bell Creek Rd. in Mechanicsville, VA, which sold for $1.993 million; and a 5,654-square-foot property at 6601 S. Van Dorn St. in Alexandria, CA for $2.09 million.

Matt Mousavi, director with Faris Lee Investments, represented the seller, Knoxville, TN-based Ruby Tuesday Inc. In December 2011, Faris Lee had been named the exclusive broker to market a portfolio of properties occupied by Ruby Tuesday throughout the Eastern US.

Mousavi tells GlobeSt.com that with regards to their intent to sell, “They were inclined to sell to improve the health of their balance sheet, and to raise cash proceeds for overall flexibility. This could potentially include the repayment of outstanding debt obligations, opportunistic share repurchases, and capital for other corporate needs.”

According to Mousavi, 23 of the properties have now sold or are currently in escrow. The properties were “selectively and strategically rolled out to the market and are garnering cap rates under 7%--record pricing for this type of credit,” according to Mousavi. All of the sales and current escrows have been within 4% of list price, most within 2.5% of list price. Many sales have also set cap rate records for the lowest cap rates achieved in their respective markets for a sit-down restaurant investment within the last three years, according to Mousavi.

Mousavi explains that net leased properties like these assets are in high demand as they provide an investor “the ability to achieve a stable and passive return on investment with minimal or no management responsibilities.” He adds that “The opportunity to achieve these strong returns combined with the security of owning a hard asset, and in this case with a publicly traded company as the tenant, has attracted a diverse buyer base, many of which are first time single-tenant asset buyers.”  

Mousavi tells GlobeSt.com that the other two properties “were sold to one all cash, non-1031 CA investor, Mare Living Trust, at a low cap rate of 6.85%.” The $2.1 million/6.85% cap rate was for one property in Rehoboth Beach, DE, and the other included a property in Greensboro, NC which sold for $2.79 million at a 6.85% cap rate. “The cap rate achieved on these is extremely aggressive,” adds Mousavi. 

“We've had incredible success with the marketing campaign and execution of our Ruby Tuesday properties. Although there has been significant interest from public and private REITs and net leased funds, our target market has been high net worth private investors, particularly out of California and New York,” Mousavi says.

Mousavi explains that his team, along with Ruby Tuesday, crafted a strategy designed to “maximize the value by selling the assets individually to a large buyer pool of smaller investors at market rates, as opposed to the entire portfolio being sold to one institutional-type buyer who would expect discounted portfolio pricing.”