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Hanley Investment Group Arranges Sale of Two Multi-Tenant Retail Pad Buildings Shadow-Anchored by Walmart Supercenters in Tennessee and Kentucky

Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm has completed the sale of two multi-tenant retail pad buildings located in the Southeastern U.S. in separate transactions for a combined value of approximately $7 million.

Hanley Investment Group Executive Vice Presidents Jeff Lefko and Bill Asher arranged the sale of a two-tenant retail building leased to Aspen Dental and Visionworks at 2960 & 2964 Miller Place Way in Knoxville, Tennessee. Built in 2015, the two-tenant, 7,500-square-foot retail pad building is located on 1.15 acres and features a 3,500-square-foot Aspen Dental-branded practice and a 4,000-square-foot Visionworks relocation store. The property sits at the entrance to a high-performing Walmart Supercenter at a busy signalized intersection. McDonald’s, Burger King and Sam’s Club are also located at this intersection. Other retailers in the retail trade area include Lowe’s, Kohl’s, Home Depot, Target, Bed Bath & Beyond, Marshalls and Ross Dress for Less. Lefko and Asher represented the seller, a private investor based in New York. The sale price for the two-tenant net-leased investment was $4,325,000.

Meanwhile, in southeastern Kentucky, Hanley Investment Group’s Dylan Mallory arranged the sale of a three-tenant, 6,847-square-foot, retail pad building leased to Visionworks, Kay Jewelers and GNC at 2007 South Highway 27 in Somerset, Kentucky. The retail building, which was built in 2015, is located on a 0.76-acre outparcel to Walmart Supercenter and Lowe’s near popular Lake Cumberland, one of the largest man-made lakes in the world and known as “The Houseboat Capital of the World.” Mallory represented the seller, Thompson Thrift Retail Group, a nationally recognized full-service real estate development company based in Indianapolis, Indiana. The sale price for the three-tenant, triple net-leased investment was $2,625,000.

Both of the properties were purchased all-cash by a private investor based in Kentucky. The buyer was motivated to purchase the properties because of the long-term strength of the locations and the national tenants.

In Knoxville, Lefko notes, “This sale is significant because it represents real cap rate compression in the two-tenant market. We capitalized year-five, fixed-rental increases for both tenants and although the property only had five years of term left for both tenants, we were able to obtain a cap rate as if the property had new, long-term leases.”

Lefko adds, “Both tenants have operated high-volume businesses at this location for five years and have triple-net corporate leases. Visionworks has been in this trade area for over 10 years and, in 2015, it relocated from a high-performing in-line store to this location with co-tenant Aspen Dental, demonstrating Visionworks’ prior success and long-term commitment to this market.”

The building occupied by Aspen Dental and Visionworks is located directly off of Interstate 640 (with 64,000 cars per day) at the corner of Millertown Pike and Kinzel Way. Millertown Pike (with 24,000 cars per day) is the primary exit off of Interstate 640 for the trade area and was recently widened to accommodate the rapidly increasing traffic, according to Lefko.

Asher added, “Having a Visionworks that is a relocation store is rather rare, which added to the attractiveness of this retail investment opportunity.”

In Somerset, Mallory notes, “The property is positioned near the entrance of one of the busiest shopping centers in the region. It also features frontage along U.S. Highway 27, which experiences traffic counts in excess 30,000 cars per day and is considered the longest stretch of businesses in the state of Kentucky outside of Louisville and Lexington. The surrounding immediate area has had notable, recent retail growth in the last five years, including the addition of many new national retail players.”

Mallory continues, “In this time of COVID-19, where non-essential retail has been difficult to sell, we were able to use our proprietary database to procure the right buyer who understood the positive, long-term outlook on both of the properties. We also focused investors on the strong real estate fundamentals of the property and found creative ways to structure around significant termination rights present in two of the three leases at the property.”

Hanley Investment Group has closed escrow on over $100 million in retail sales in the last 48 days and has achieved record cap rates for single-tenant and multi-tenant retail in the Southeastern U.S.

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