Gavin Kam of Marcus & Millichap, steering the Movie Gallery sales, tells GlobeSt.com that the newly built stores came to market about six months ago and all locations were under contract within 60 days. The first to sell is a 4,200-sf retail building at 1817 US Highway 79 South in Henderson, east of Dallas, which was on the market for $549,000 with a 9.5% cap rate.
The 1031 Exchange buyer traded in a multifamily property in his hometown of Salinas, CA and brought the proceeds to Texas for an all-cash transaction. The buyer's broker, George Renz with Renz & Renz Brokerage Co. in Gilroy, CA, found the deal on the Marcus & Millichap Web site.
"Many investors are turning to secondary markets to get higher returns," Kam says of the speedy contracts for a handful of properties tucked away in Woodville, Diboll and Borger, each 150 miles or more from a metropolis.
Movie Gallery Inc., based in Dothan, AL, has each location locked to a seven-year lease with multiple renewal options. Kam says the leases "have an attractive bump in year five and through the option periods." The chain is the nation's third largest movie rental operation with more than 1,900 corporate-owned stores in 50 states.
The seller is a Texarkana developer who delivered the retail structures in the past year, with a couple as recently as last month. The properties ranged from 3,600 sf to 4,200 sf, some with several acres and others positioned on less than an acre, but all with US Highway frontage. The asking prices ranged from $452,886 to $563,675.
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