Faris Lee Investments Completes the Sale of 2 Ground Leases in Riverside CA and Mesa, AZ, at Below 4% Cap rates totaling $6.5 million

Irvine, CA (August 3, 2020) - Faris Lee Investments, a leading retail advisory, and investment sales firm has completed the $4.3 million sale of a Starbucks ground lease in Riverside, CA and the $2.145 million sale of a McDonald’s ground lease in Mesa, AZ.

Don MacLellan, Senior Managing Partner, Rick Chichester, CEO & president, Phil Ramming, Senior Managing Director at Faris Lee Investments joined forces with Cypress Retail Group to complete the sale of Starbucks in Riverside. Cypress is a highly experienced landlord and tenant representation firm affiliated with XTeam. Together, they represented the seller, a private developer from Idaho.

Located near UC Riverside, the tenant is currently under a new 20-year lease term with 3 (10-year) options to extend, including 10% rental increases. The term of the lease generated steady net operating income growth and hedges against inflation for the next 5 decades. The seller objectives were to reinvest the proceeds in Idaho closer to their base.

“Faris Lee focused its marketing strategy on the attractive term of the ground lease, the strength of the tenant, and the irreplaceable location as the only drive-thru coffee option for the entire UCR campus of nearly 20,000 students,” said Don MacLellan. “During these challenging times, buyers are looking for security in their investments. Strong operators, like Starbucks, with long-term leases that are paying rent, provide stability during the uncertainty of the pandemic.”

Faris Lee Investments generated multiple offers and attracted various investor profiles. The team procured a California-based family office that was able to close all cash at a 3.72% cap within the seller’s expected timeframe.

The sale of McDonald’s in Mesa, AZ, represented a closing cap rate of 3.8%. McDonald’s, the #1 fast-food brand in the world, has been operating at this location since 1994. The tenant had recently exercised one of its several remaining options.

Don Maclellan, Rick Chichester, and Phil Ramming represented the seller, Macerich REIT.

Faris Lee Investments' marketing strategy focused on the strength of the tenant, its commitment to this site, and strategic location as a pad to Superstition Springs Mall, a major Phoenix regional mall. A few years ago, McDonald’s went through an extensive renovation to convert the store to its new prototype design and quality.

The team worked with a local AZ broker who represented a Southern California-based 1031 exchange buyer who was able to close all cash within a week from the opening of escrow.

“The pandemic has introduced new challenges to overcome to successfully transact at an industry-leading level. Because we understand the fundamentals of real estate, we uniquely positioned both assets as long term legacy quality real estate, showing that the investments would maintain their value through the current pandemic environment and various future economic cycles. We were able to produce results that exceeded the seller expectations. Our skill set is to align assets with the ideal profile buyer pool based on their investment goals,” said Don MacLellan.

About Faris Lee Investments: Faris Lee Investments is a national leading retail advisory and investment sales firm. The company’s high-level retail investment advisors and sophisticated financing experts develop forward-thinking strategies for all retail acquisitions and dispositions and guide clients through complex transactions. Through its recent strategic affiliation with X-Team Retail Advisors, a nationwide partnership of seasoned retail leasing experts, Faris Lee offers a fully integrated platform with disciplined expertise in landlord leasing, tenant representation, capital markets, and investment sales to maximize value for clients.
For more information, visit www.farislee.com


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