HOUSTON-An investment group from Sacramento has closed an all-cash deal for 15 Jiffy Lube International Inc. stores with two to 20 years left on franchisees' triple net leases. The seven-state portfolio, brought to market by the corporate owner, was pushing the $8.27-million ask when final documents were inked.
The investment group was up against seven other solid offers for the portfolio, which sold for $330 per sf based on the average 1,700-sf store size, Patrick Graham, associate broker for Colliers Texas in Houston, tells GlobeSt.com. The package had one Texas property, 3302 Ella Blvd. The balance is made up of retail sites in Burbank, Crestwood and Downer's Grove, IL; Anderson, Kokomo and Noblesville, IN; Cedar Falls, two in Cedar Rapids and Council Bluffs, IA; Akron and Eaton, OH; Silverdale, WA; and Evanston, WY.
The stores, positioned on roughly one-third acre tracts, range from 10 to 25 years old. The average rent roll is $640,632 per year, according to the investment summary.
Graham and Colliers associate Joe Knauth say the offering attracted a broad spectrum of buyers, the majority coming from the 1031 exchange ranks. The deal closed in 129 days. "For a transaction that complex, we were pleased," Graham says. "We specifically selected the one that was all cash for the expediency."
There were two primary hurdles to overcome: finding all-cash buyer to avoid the lengthy process to secure environmental reports as required by lenders and full disclosure on financials. "The buyers were not able to see the financials of the franchisees because of their agreements with Shell [Jiffy Lube's parent company]," Knauth explains. "That was a huge hurdle. So, we had to make the buyer comfortable with the stability of the cash flow."
The leases are a 50-50 split of fixed rates and rents based on the percentage of sales, according to the duo. Patrick explains the comfort factor was achieved because all franchisees are established, good credit operators, including one Fortune 500 company.
Patrick says Jiffy Lube approached the brokers to sell the package because of their track record in automotive-related property sales. Michael McFarland with Lee & Associates in Carlsbad, CA represented the buyer. Helen Sullivan in LandAmerica Commercial Services' Dallas office was the closing agent.
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