LA-Area Kohl’s Sells at Record-Setting 4.8% Cap Rate

RENTV.com

An 88k sf Kohl’s in the Los Angeles area just traded hands at a price of $21.95 mil, or about $249/sf. The single-tenant, NNN-leased property, which was acquired by a NoCal-based private investor in a 1031 exchange, sold for a record-breaking low cap rate of 4.80 percent.

“According to our CoStar research, this sale represented the all-time lowest cap rate ever for a single-tenant Kohl’s in the U.S.,” said Ed Hanley, president of Hanley Investment Group. “The previous record-holder was for a Kohl’s in Redondo Beach that sold in November 2013, and the cap rate for this Kohl’s sale beat out the Redondo Beach record low cap rate by more than 50 basis points.”

According to Hanley Investment Group’s Senior Vice President Kevin Fryman, Kohl’s had 14 years remaining on the initial term with strong increases and options to extend. “The record low cap rate was due to the lack of inventory and the fact that cap rates are continuing to compress, combined with the

The seller, a Los Angeles-based private investor, was represented by Hanley and Fryman, along with Eric Wohl, also from Hanley Investment Group.

Hanley adds that the company is currently marketing numerous single-tenant investment opportunities including a single-tenant triple-net 55k sf Best Buy in Sherman Oaks for $41.74 mil, with 13 years remaining on its corporate lease. The property is located adjacent to Gelson’s Market, at the corner of Van Nuys Boulevard and Milbank St in Sherman Oaks.

“Single-tenant net-leased demand is at a historic high due to the lack of quality inventory in the market and strong pent-up buyer demand,” said Hanley. “It’s probably the number-one sought-after investment product today for the private capital market, which is driving up prices. Although some new construction is adding to the supply, we still expect the net-lease sector to remain strong throughout 2015. Investors will continue to be attracted to quality net-lease properties due to the good cash flow, tax benefits and limited management.”