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HOUSTON-A private investor from San Juan Capistrano, CA has purchased a 15,120-sf, two-year-old building as the down leg to a 1031 Exchange, swapping out a US Postal Service-leased property in Florida for a Walgreen store in South Houston.

Michael Derk of the Long Beach, CA office of Marcus & Millichap Capital Corp. tells GlobeSt.com that the buyer was looking for a single-tenant property with a credit tenant. What he got was a 1.7-acre asset at 398 Edgebrook Dr., leased for the next 18 years to Deerfield, IL-based Walgreen Co. The property traded with a 7.7% cap rate, the broker says.

Derk arranged $3.6 million in acquisition financing, with a 76% loan-to-value ratio, through LaSalle Bank of Chicago. The loan, which amortizes over 30 years, has a 5.88% fixed rate for the first 10 years of the 15-year term.

Steve Soqui in the Long Beach office of Marcus & Millichap Real Estate Investment Brokerage Co. represented the buyer. Gavin Kam in Marcus & Millichap’s Dallas office negotiated on behalf of the seller, LSI Edgebrook LP, which developed the property in 2001. Soqui says the Walgreen-occupied property, assessed at $1.7 million by Harris County, was on the market about 30 days and attracted lots of interest.

Derk says LaSalle Bank had no qualms about financing the deal although the property and its neighbors have monitors within their bounds to keep tabs on water quality due to remediation work done awhile back at nearby gas stations. The monitors often are a red flag for lenders because it could signal future environmental problems.

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