Hanley Investment Group’s Executive Vice President Bill Asher and Vice President Jeff Lefko, along with Progressive Real Estate Partners’ Senior Vice President, Investment Sales Greg Bedell, represented the seller, a private partnership from Orange County, California. The buyer, a local family office from Riverside County, was represented by Howard Rosenthal and Guy Excell of Rosenthal & Excell Commercial Real Estate in Hemet, California.
“We procured an all-cash 1031 exchange buyer that closed at 100% of the listed price shortly after KFC opened for business and started paying rent,” says Asher. “This is a brand-new, 2022-construction with a new absolute triple-net long-term lease guaranteed by RBD California Restaurants, the largest KFC franchisee in Southern California. RBD’s parent company, RBD Restaurants News Zealand, is publicly traded (NZE: RBD). The building is KFC’s new ‘Next Generation Prototype’ that prioritizes a digital-forward and contactless customer experience and includes a drive-thru and indoor and outdoor seating.”
Bedell comments, “The closing cap rate of 3.65 percent represents a record-low cap rate for a single-tenant KFC in the Inland Empire.”
The 2,200-square-foot KFC building is situated on 1.01 acres at 2560 North Perris Boulevard in Perris in the Cardenas Markets-anchored shopping center, near the Interstate 215 (±103,000 cars per day), between the Nuevo Road (±27,000 cars per day) and Ramona Expressway (±16,000 cars per day) freeway on/off-ramps.
According to Bedell, the shopping center is undergoing major redevelopment. “The former Walmart building behind KFC was recently re-tenanted to include Fitness 19 and WSS (both are open and operating) and Harbor Freight (opens June 28, 2022). Other tenants in the shopping center include Dollar Tree, Wells Fargo, Taco Bell, Domino’s, T-Mobile, Gentle Dental and others.”
Known as an industrial hub, Perris has more than 46 million square feet of existing distribution centers (with 13 million square feet planned or under construction), including national companies such as Amazon, The Home Depot, Lowe’s, O’Reilly Auto Parts, Proctor & Gamble, Sketchers, Ross Dress for Less, Walgreens and more.
“The dense industrial activity combined with the property’s location on Perris Boulevard, its proximity to the freeway, synergy with other retailers, and the area’s strong and growing demographics, create the ideal environment for KFC’s long-term success,” noted Asher. Within five miles of the property, there are 126,719 people with an average household income of $72,459.
KFC Corporation, based in Louisville, Kentucky, has been serving Finger Lickin’ Good Original Recipe fried chicken since 1952. There are more than 26,000 KFC restaurants in over 145 countries and territories around the world. KFC Corporation is a subsidiary of Yum! Brands, Inc., which is also based in Louisville (NYSE: YUM). KFC expects to open 55 new stores in 2022.
“The demand for single-tenant net-leased retail investments occupied by a successful national credit quick-service restaurant with a drive-thru has been at an unprecedented level, especially in the last 12 months,” Asher notes. “Pricing and cap rates have been at historic levels, and even with the recent spike in interest rates, we expect this to continue for the rest of 2022.”