36,000-SF Retail Deals Complete Center Breakup

CORONA, CA-Two separate buyers have closed on the acquisitions of two NNN retail properties totaling nearly 36,000 square feet that complete a three-parcel breakup strategy at the Shops at Sycamore Creek, with all three sales at cap rates below 7%, according to Irvine-based Faris Lee Investments, which represented the seller in the transactions. In the latest two sales, YFP Sycamore Creek LLC of Los Angeles bought a 12,900-square-foot CVS/Pharmacy on 1.89 acres for $4.93 million, and the Corona-based Knaak Family Partnership bought a 20-year, 23,087-square-foot NNN ground lease for a Von’s fuel station for $2.13 million. Earlier this year, a Wells Fargo-occupied parcel sold for $2.6 million to begin the breakup process, with the buyer placing a 50% loan on the property.

Faris Lee senior managing director Dennis Vaccaro and president Richard Walter represented Orange County-based seller Shops at Sycamore Creek LLC on all three sales. Vaccaro points out that the Faris Lee team "acted as a strategic liaison between the developer, lender, attorneys and engineers during every step of this complex parcelization process."

Walter explains that breaking up a retail property into smaller parcels expands the buyer pool and allows small- to mid-sized investors the opportunity to own a portion of a larger retail center, which ultimately provides them with a more unique and diverse investment. A particular challenge on this assignment was the fact that several hundred housing sites located across the street from the property were never built. Subsequently, several suites within the center have never leased and most tenants reported low sales. In addition, amendments to the REA were necessary to effect the breakup sale.

“We overcame that issue by emphasizing the creditworthiness of the subject tenants and long term nature of their leases. Long term there is a great deal of opportunity within this community and Corona location,” Walter says.

Built in 2008 and 2009, The Shops at Sycamore Creek is situated in the master-planned community of Sycamore Creek, located just off Interstate 15 at the Indian Truck Trail Road exit, with 128,000 cars passing the center each day.