Two-Tenant Triple Net Trades in 1031 Exchange

TAMPA, FL—Triple net leased acquisitiosn are still hard to find in Florida, but one Florida-based buyer just completed a 1031 exchange on a two-tenant property on an acre of land in Spring Hill. The property sold for $1.61 million, which is a 8% cap rate.

Located just 30 minutes north of Tampa, Pet Supermarket and Humana Marketplace occupy the triple net leased asset. Teal Henderson, an associate at Calkain, exclusively represented the private seller in the deal. The property was initially introduced to the market with soon-expiring leases.

"We quickly recognized the hurdle of the current lease terms being unfavorable along with the tertiary and lesser known Florida location of Spring Hill,” Henderson said in a statement. “We counseled the seller in reaching out to the tenants and restructuring with more attractive terms.”

Pet Supermarket renewed its lease for seven years with structured increases and options and Humana exercised its two-year option. As a triple net ground lease, the investment requires the tenant pay for real estate taxes, insurance, and maintenance expenses, which effectively provides the landlord with a passive, bond-like income stream through commercial real estate ownership.

“After successful negotiations, we re-introduced the property on the market and generated a quick contract," Henderson says. "A private buyer interested in a Florida property with an investment grade tenant with ties to the medical industry purchased the asset." Despite the initial challenges, the transaction occurred within the last 15 days.

The triple net site offers a 9,000-square-foot building divided into a 7,000-square foot space for Pet Supermarket and a 2,000-square-foot space for Humana. The seller, an experienced private owner and long-time client of Calkain, was looking to liquidate to secure other opportunities.

“Net lease, across all real estate asset classes, is a tremendous opportunity in Florida,” Sean McConnell as senior vice president and tenant representation lead at Jones Lang LaSalle’s Florida operations, tells GlobeSt.com. “I see no lull in the surge of investors seeking quality cash-flowing properties rooted in high-growth Florida markets.”