Riverside’s Sonic Drive-In Sells for Record Cap Rate of 4.70%

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Riverside, CA  – Hanley Investment Group Real Estate Advisors, a nationally-recognized real estate brokerage and advisory firm specializing in retail property sales, in conjunction with Lee & Associates, announced today that the two firms completed the sale of a single-tenant Sonic Drive-in located at 9505 Magnolia Avenue in Riverside, Calif. The sale price of $2,555,000 represented a cap rate of 4.70%, a record low for a single-tenant Sonic Drive-In restaurant nationwide.

Hanley Investment Group Executive Vice President Bill Asher, along with Lee & Associates Senior Vice Presidents Jon Friesen and Jeff Stanley, represented the seller, Evergreen – Magnolia & Van Buren NWC, L.L.C. (an entity of Evergreen Devco, Inc. in Glendale, Calif).  The buyer, a private investor from Los Angeles, was represented by Paul Bahk of Realtex Properties, Inc. in Los Angeles.

Built in 2015, the 3,275-square-foot Sonic Drive-in is situated on a .50-acre parcel at the signalized intersection  of Magnolia Avenue and Van Buren Avenue, one of the highest trafficked intersections in Riverside with average daily traffic counts of 75,000 cars per day. Additionally, the building was the winner of the Beautification Award for 2015 by the city of Riverside.

“The investment featured an outstanding combination of characteristics that led to a record sales price,” said Asher. “It was leased to the largest Sonic franchisee in southern California, boasted a new long-term absolute triple-net lease with rental increases every five years and was in an ‘A+’ location in Riverside – a market with over 255,000 people within a five-mile radius.”

“Since opening in November 2015, this particular Sonic Drive-in location was trending to be one of the top performing Sonics in the chain for the franchisee and a top performer nationwide,” said Friesen. “It was an attractive selling point that played a role in obtaining a record low cap rate sale.”

According to Asher, “Investor demand for a high performing, well-located single-tenant triple-net leased property is still very strong in today’s market. Buyers continue to pay premiums for these types of properties seeking long-term cash flow, with relatively low risk and little to no maintenance. As investors continue to look for security, we expect that the demand for high quality retail assets will remain strong through 2016.”

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