Auto Dealership with Excess Land Fetches $26M

FREMONT, CA-A 9.5-acre property here that includes an auto dealership business and excess developable land has changed hands for $26 million, according to Marcus & Millichap, the firm that brokered the transaction. The sales price translates to a 6.75% capitalization rate on in-place income, according to M&M.

Located adjacent to the Pacific Commons master-planned business park, the Fremont Motorcars dealership occupies 7.2 acres and includes two buildings totaling 50,654 sf,net rentable. Net leased for 15 years to Sonic Automotive, the dealership includes a Volvo sales and business office in a 13,095-sf building and a Jaguar and Land Rover sales office, as well as parts and services department, in a 37,559-sf building.

The remainder of the property, approximately 2.3 acres, is undeveloped. Sonic has right of first refusal to expand onto the property with another sales office for another auto brand.

The seller was NICPA Fremont LLC, a merchant developer who built the dealership and leased it to Sonic. The new owner is Fremont Motor Cars LLC, whose managing partner is Dale Lohler. The acquisition completed an IRS 1031 exchange.

Chris Maling, the Los Angeles-based senior director of M&M’s National Retail Group, and his brother Dave Maling had the disposition assignment. CB Richard Ellis represented the buyer. Chris Maling tells GlobeSt.com there were 16 offers submitted for the property and it sold for $750,000 above its list price.

The capitalization rate means the annual NOI from the property is 6.75% of the purchase price, or $1.75 million, which in turn translates to an annual rental rate of approximately $34 per sf of building area leased.