Net Leased Best Buy Sale Proves Theory

PALM BEACH—A Best Buy just traded in an off­-market transaction in Boca Raton, FL. The single­-tenant triple net leased asset sold for $11.5 million. The 59,500­square­foot Best Buy sits on 4.7 acres of land.

The buyer, Magi Henderson, has ties to Santa Monica, CA ­based REIT Pacific Star. The seller, Palmer Chicago Investment Company, a California general partnership, is affiliated with Black Equities Group of Beverly Hills, CA.

“The sale of this Boca Raton Best Buy highlights the strong appetite investors have for well­ located net lease properties across the country and growing confidence in the sector of consumer electronic tenants,” Hanley Investment Group president Ed Hanley, who arranged the sale, tells Best Buy is located at 20540 State Road 7 in the Shadowood Square shopping center. Bed Bath & Beyond, Regal Cinemas, Old Navy, Stein Mart, Walgreens, and McDonald’s are among the tenants.

“Net leased buyers have shown caution in the past few years when evaluating investments in the consumer electronics tenant category,” says Hanley. “This is partially due to the intense competition from mass merchants and online retailers who have taken a big bite out of the brick and mortar sales thus raising the concern stores may close or rents may fall.”

As Hanley sees it, there were several attributes that made this particular net leased investment attractive. First, he points to the old adage “location, location, location.” Hanley says the building location is in an attractive area of the city and sits in a popular shopping center.

Another factor is the strength of the tenant. Best Buy has been operating in this Boca Raton retail location for 20 years and just committed to a new 10­year lease.

“Best Buy is the largest US consumer electronics retailer and is focused on accelerating online sales growth, and improving growth categories like the ‘connected home’ category, which includes smart thermostats such as Nest and wireless video monitoring systems,” Hanley says. “It is also expanding its line­up of Pacific Kitchen & Home ‘store­ within­ a­ store’ concept, which includes upscale washers, dryers and kitchen appliances. Buyers looking to purchase net ­leased investments should look for these and other attributes like rent­ to ­store sales ratio when evaluating these types of opportunities.”

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