PHOENIX-Less than a week after acquiring PetsMart Inc.'s 356,000-square-foot corporate headquarters for $102 million, Cole Real Estate Investments bought PetSmart again. The local investor spent $74 million to add 11 PetSmart retail properties to its expanding portfolio.
The portfolio consists of properties in California, Florida, Illinois, Maryland, Massachusetts, Michigan and Texas that are leased to PetSmart under one master lease. That lease has an original 20-year lease term (approximately 10 years remain on the lease), with three automatic renewals for up to 20 additional years. The buildings measure between 26,000 square feet and 30,000 square feet and are around the same age.
Chad Adams, Cole Real Estate Investments’ director of single-tenant retail acquisitions, says the master lease was very appealing from a cash-flow perspective, both for now and the future. “From an investor’s perspective, this is a great lease that will provide our yield to grow during the next 10 years,” Adams tells GlobeSt.com.
In addition to an attractive master lease, the transaction also brought an attractive tenant to the table. “PetSmart is a credit tenant and the largest pet-care retailer in the country,” Adams explains. In assembling its multibillion-dollar portfolio, Cole Real Estate wants diversification in its tenant mix, geographical locations as well as industry leaders. “PetSmart fits the bill for that industry,” Adams adds.
Adams declined to mention specifically whether Cole would acquire more PetSmart retail properties throughout the remainder of 2011. However, “PetSmart is obviously a tenant we like. They’re a great operator and retailer. We’re open to acquiring more in the future.”
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