A single-tenant, NNN absolute investment in Sacramento has sold for $7.9 mil. The asset, located at 9036 Calvine Rd, is occupied by Merryhill Schools.
Built in 1997, the 4.64 campus features a 12.6k sf building for the elementary school, an 8k sf building for the preschool, an athletic field, pool and pool house, plus two playgrounds for the pre-school-age children.
Eric Vu of Hanley Investment Group Real Estate Advisors represented the seller, a private San Francisco Bay Area family trust. The buyer, a 1031 exchange investor from the Silicon Valley, was repped by Tom Hyland of Hyland Investment Properties Inc, of Lafayette, CA.
According to Vu, the investment represented a rare opportunity to acquire an elementary school location in addition to a preschool with strong enrollment and full classrooms. “Merryhill Schools has been at this location for over 20 years and we assisted the seller with extending the tenant’s lease to achieve a better return. The tenant has more than 10 years remaining on the new lease term plus two five-year renewal options,” said Vu.
As an absolute triple-net lease, there are no landlord responsibilities. The tenant pays for all expenses including taxes, insurance, common area maintenance, roof and structure. “The tenant is currently investing in building improvements and upgrades, which demonstrates their long-term commitment to the property,” Vu noted.
Merryhill Schools’ lease is guaranteed by Nobel Learning Communities Inc, the largest operator of private for-profit k-12 schools in the nation with a network of more than 200 private schools across the U.S. The network includes preschools, elementary schools, middle schools, and specialty high schools. The company provides private education, with small schools and class sizes, as well as various supplemental educational services, including before and after-school programs, the Camp Zone summer program, learning support programs, and camps.
Sacramento is one of the fastest growing markets in the state of California and Merryhill Schools is located in Sacramento’s highly desirable community of Elk Grove, which has excellent demographics, reports Vu. Over 115,000 people with an average of $90,000 annual household income reside within three miles of the Merryhill Schools’ campus. Approximately 70 percent of these residents own their own home. Over 65 percent of the area’s population went to college.
“The school benefits from the strong, growing community, which has enjoyed a population increase of nearly 10 percent since 2010 in the immediate area,” said Vu. “Over 100 planning projects are in progress throughout the immediate area.”