California Buyers Go North in Search of Returns
The California buyer was in a 1031 exchange looking for a solid national tenant, triple net lease with 7%-plus return, so a Hoquiam, WA Rite Aid property was the perfect fit for the out-of-state purchaser.
HOQUIAM, WA—An out-of-state buyer in search of better returns found just that with the purchase of a 17,384-square-foot standalone retail property located at 3130 Simpson Ave. The Lloyd Wells Gift Trust purchased the building at a 7.5% cap rate from Smith Legacy LLC.
Colliers International’s Reza Ghobadi of the firm’s Encino, CA office worked with Ryan Marn of the Seattle office to connect the seller and buyer in the transaction.
“The seller’s plan was to sell and exchange into two smaller properties,” Ghobadi tells GlobeSt.com. “The buyer was in a 1031 exchange looking for a solid national tenant, triple net lease with 7%-plus return, and the Hoquiam property was the perfect fit. Both buyer and seller are California residents. They have a hard time finding anything in California with decent returns, so they are looking for opportunities out of state.”
The Seattle regional market is targeted by investors for core product because of healthy economic conditions, according to a fourth quarter retail report from Kidder Mathews. Indeed, cap rates are very low for A-quality properties and much higher for B- and C-quality properties.
Occupied by Rite Aid on a long-term NNN lease, the building is located at the intersection of Simpson Avenue and Myrtle Street along one of Hoquiam’s primary commercial corridors. This allows for service not just to Hoquiam, but also to the local communities of Aberdeen, Grays Harbor and Cosmopolis. Other nearby retailers include Dollar Tree and Anytime Fitness.
“The Simpson Avenue asset represents a stable investment in an established community,” Ghobadi notes. “Both the buyer and seller achieved their goals in the transaction.”
Seattle retail sales volume was down for the first three quarters of 2019. However, with a flurry of deals in the fourth quarter, the full year volume increased, says the Kidder report.