Stan Johnson Company

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of two early childhood education facilities located in suburban Atlanta, Georgia. Located at 12070 Etris Road in Roswell and 4395 Drew Court in Cumming, both properties are leased to Little Sunshine Playhouse on long-term net leases. Stan Johnson Company’s Milo Spector, who has an extensive early childhood education track record, exclusively represented the seller, a New York-based private real estate office. A California-based investor acquired both properties for a total of approximately $15.0 million reflecting a 5.75 percent cap rate. Both parties were involved in 1031 exchanges.  “This transaction is unique in that we represented the seller on the acquisition of these two properties just a year ago. In that short timeframe, we were able to capitalize on the aggressive shift in cap rates for this sector,” said Spector, Director in Stan Johnson Company’s Walnut Creek, California office. “I am pleased to say that we received multiple offers and ended up selling the properties for 100 percent of ask, all cash to a high-net-worth exchange buyer, setting a new record cap rate.”  The properties were built in 2020, and the Roswell location totals 9,812 square feet on 1.40 acres. The Cumming property is situated on 3.07 acres and totals 10,850 square feet. Both communities are located in the northeast Atlanta metro area and boast strong demographics with rapidly growing populations. 

Originally published by Wealth Management The corporate sale-leaseback market is coming off a record-high first quarter for deal-making. Despite repricing occurring in the wake of rising debt costs, industry insiders remain optimistic of continued strong momentum ahead in the remainder of the year.  The $8.4 billion in sales logged in first quarter is on par with fourth quarter 2021 activity and nearly triple the $2.9 billion in transactions recorded in the first quarter of 2021, according to a market analysis by SLB Capital Advisors. “That is the biggest first quarter that we’ve seen. The dollar volume was driven largely by two casino deals, but the 186 is the highest count that we’ve seen over the last few years by a good 20 to 30,” says Scott Merkle, managing director of SLB Capital Advisors.  The casino transactions included VICI’s acquisition of the Venetian Resort, Expo and Convention Center for $4 billion and GLPI’s acquisition of two Cordish Companies’ Live! properties for $674 million. Merkle also attributes activity to the huge volume of M&A activity that occurred in 2021.  Traditionally, companies use sale-leasebacks as a financing tool to monetize or “unlock” 100 percent of the equity tied up in real estate. That capital is often used to reinvest back into the business, improve balance sheets or finance expansion. Another catalyst for sale-leasebacks is M&A activity, with the acquiring entity using a sale-leaseback on the real estate of the business they are buying to help finance the acquisition. According to BMO Capital Markets, the U.S. saw 478 M&A transactions last year that were valued at nearly $1.9 trillion.  “A lot of times what we see on the M&A side is groups that will utilize that sale-leaseback as part of the capital stack, and there was an incredible amount of M&A activity last year,” says Jeff Tracy, a director at the Stan Johnson Co. in Tulsa, Okla. A sale-leaseback of the real estate can bring in 20 to 30 percent of the overall capital stack needed, which helps to reduce the amount of equity and/or debt a buyer needs to bring to the table, he adds.  Some industry experts estimate that industrial assets represent nearly half of all corporate sale-leaseback transactions, and expansion of the industrial sector over the past few years has provided fresh inventory for eager buyers. “Our business has never been more brisk. We are seeing a lot of activity as corporate users continue to look to monetize their industrial real estate and corporate-owned facilities, because they realize it’s a better use of funds to be able to put that capital to work within their business,” says Erik Foster, a principal and head of industrial capital markets, Capital Markets at Avison Young in Chicago.  Market adjusts to higher rates  The broader market is adjusting to higher costs of debt financing for real estate, which has climbed 150 to 250+ basis points since January 1. Although sources agree that rising interest rates haven’t changed the volume of sale-leaseback deals that are getting done, it is resulting in price adjustments and fewer bidders. “As debt has gotten more expensive, buildings can’t sell as aggressively as they did a couple of months ago,” notes Foster.  On average, cap rates have increased between 25 and 75 basis points, depending on the building, location, tenant and term. “The better locations and better credits are going to be less impacted, because there is a significant amount of capital still out there that is chasing deals,” says Tracy. The smaller or more challenging credits and tertiary locations are seeing bigger moves in cap rates, he adds.  Although there is still significant capital targeting sale-leasebacks, the bidder pool has thinned with some investors that have pushed pause amid the repricing that is occurring. Instead of getting 10 offers, a sale-leaseback listing might get six or seven now, because buyers are being more cautious, notes Merkle. SLB Capital Advisors is currently working on a sale-leaseback of an industrial portfolio valued between $75 million and $100 million. First round offers came in during the first week of April with nine groups that advanced. Typically, buyers increase their offers when moving to the second round. However, due to the rise in interest rates, many moved in the opposite direction, lowering their price. The deal is under LOI and moving forward, but the pullback on bidding speaks to how buyers are moving more cautiously, notes Merkle.  Stan Johnson Co. is working on the sale-leaseback of a portfolio of properties for a recreational vehicle business. One of the bids received was structured with a floating cap rate. The bidder included a cap rate range that allowed the seller to choose the rent level they wanted to set, as well as a fixed basis point spread over treasury to account for rate fluctuations.  So, depending on how rates moved prior to the deal closing, the cap rate also could move. “That is something I haven’t seen before, and I think it points to the fact that groups still have a desire to get deals done and they need to deploy capital. But they’re trying to be creative as possible in not only making sure they are competitive, but also protecting themselves from a downside scenario of a big interest rate move,” says Tracy.   Avid buyer interest  Rising interest rates could cool what has been a white-hot seller’s market for sale-leasebacks over the past year. However, industry participants are still optimistic about the near-term outlook. “While cap rates have risen, real estate is still at incredibly attractive levels for owner-operators to monetize their real estate in a sale-leaseback,” says Merkle. When one looks at sale-leaseback from a multiple perspective, multiples on real estate that might have been 15x are now 14x. Those numbers are really compelling for a business to execute a sale-leaseback when their business is worth multiples of say 8-10x, he adds.  SLB Capital Advisors has seen an uptick in pitch activity, inquiries from companies considering a sale-leaseback on assets, in recent weeks. “So, in spite of the pricing environment shifting rapidly over the past 45 days, we’re still in an environment where there is a ton of activity, and I expect to see a lot of continued sale-leaseback activity through the balance of the year,” says Merkle.  Another reason for that optimism is that there is still a significant amount of investor capital aimed at sale-leasebacks. “The buyer pools are more diverse and deeper than I have ever seen in my career, and that continues to put pressure on pricing and provides owners with great liquidity options,” notes Foster.  W.P. Carey Inc. alone recently announced that it had entered into $400 million in new investment agreements since the end of first quarter. The net lease REIT specializes in corporate sale-leasebacks, build-to-suits and the acquisition of single-tenant net lease properties.  In addition, more investors have entered the sale-leaseback market looking to acquire assets. “There has been a huge wall of capital looking to be deployed into sale-leasebacks. We’ve seen even more buyers step up to the plate over the last 12 months or so,” says Merkle. Some buyers are moving more cautiously, but there is still a lot of capital available for sale-leasebacks, he adds.   

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of an open-air shopping center located at 1250 Scenic Highway South in Lawrenceville, Georgia. The Shoppes at Webb Gin is a 330,000-square-foot center anchored by Barnes & Noble, DSW and the state’s top visited Sprouts grocery store. Margaret Caldwell and Patrick Kelley of Stan Johnson Company brokered the sale on behalf of Olshan Properties, a full-service real estate investment firm based in New York. The property was acquired for $97.0 million by Baltimore, Maryland-based Continental Realty Corporation. At the time of sale, the center was 89 percent leased.  “Webb Gin’s tenants have benefitted from the significant increase of shopping in the suburbs with average sales growing year-over-year by around 30 percent. This will lead to rental growth given the high occupancy in the overall market,” said Caldwell, Managing Director and Partner in Stan Johnson Company’s Atlanta, Georgia office. “Demand for these types of centers is substantial in today’s market. We were under contract even before broadly marketing the listing.” The Shoppes at Webb Gin is a retail and office mixed-use center featuring 70 total units across eight individual buildings. Additional tenants include H&M, LensCrafters, Kirkland’s, Victoria’s Secret, American Eagle, LOFT, Sephora, and many more. The property ranks in the top 93 percent of shopping centers across the U.S. and draws more than 3.6 million visitors each year.   “The Shoppes at Webb Gin’s strong tenancy, leasing momentum and robust sales coming out of the pandemic accentuate the property’s investment appeal, and a compelling preemptive offer made for a smooth sales process,” added Kelley, Associate Director.  The shopping center was built in 2006 and is situated on more than 48 acres. It also features available land for additional development along with a build-to-suit outparcel pad. Approximately 35 miles northeast of downtown Atlanta, the property straddles Webb Gin Road and is located along the area’s main retail corridor of Scenic Highway. Neighboring retailers include Walmart, Kroger, Sam’s Club and Home Depot. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of six freestanding retail buildings across several states in the southwest and Georgia. The properties are leased to Family Dollar and Dollar General. In four separate transactions, Evan Altemus of Stan Johnson Company represented the seller, a Texas-based individual investor. The assets were acquired by three separate investor groups all based in Texas, including two private buyers and an institutional investor. The properties traded for a combined $6.3 million.  “These transactions were part of a larger investment strategy for the seller,” said Altemus, Associate Director in Stan Johnson Company’s Dallas, Texas office. “Their comfort lies in the single-tenant industrial sector and given our breadth and expertise across all asset types, the seller asked us to help them execute their strategy of exiting the retail market and transitioning to more industrial-focused properties. We were able to bring qualified buyers to the table, providing them with critical boots-on-the-ground information in order to enhance their understanding of each out-of-state market.”  Each dollar store was built or remodeled between 2005 and 2018, and the tenants operate on double net leases at all locations.  “Cap rates on these properties were comparatively high due to the short-term, double net leases, and because of the corporate credit and the ability to increase the value over time, these deals brought interest from yield-chasing investors historically focused on the multi-tenant retail sector,” added Altemus. 

Excerpt of article originally published by Commercial Property Executive CPE unveils the 20 leading firms overall—plus the top performers for investment and leasing—in our latest annual ranking.  Exceeding Expectations  Despite suffering setbacks during the pandemic in 2020, commercial real estate transaction volume rebounded in 2021 and exceeded expectations. Our survey respondents reported strong levels of investment sales activity, with a combined volume of over $951 billion in 2021― up from $484 billion in 2020 and $630 billion in 2019.  Even in the face of looming rate hikes, the outlook for commercial real estate investment activity remains positive for 2022, as investors will likely continue to be driven towards property asset types boasting strong underlying fundamentals.  While the industry remains optimistic for 2022, our 2022 Most Powerful Brokerage Firms ranking highlights the top firms to watch.  Methodology Commercial Property Executive‘s rankings of the Most Powerful Brokerage Firms are based on self-reported data from all firms. We used a weighted formula, considered various factors including a firm’s performance in 2021 and previous years, and reviewed data that reflects investment sales and leasing activity. The rankings represent what we feel is a logical balance between firm growth and market share. Ranking factors are not limited to the data that appear on this page. 

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a freestanding grocery store located at 1937 West Main Street in Stamford, Connecticut. The 69,733-square-foot supermarket is leased to Stop & Shop, a regional grocer located in the Northeastern U.S. and a wholly owned subsidiary of Ahold Delhaize, one of the world’s largest food retail groups. Jason Maier of Stan Johnson Company represented the seller, a private investor based in New York. The property was acquired for approximately $46.7 million by a Pennsylvania-based institutional investor. Both buyer and seller were involved in 1031 exchanges. “While cap rates have remained low and stable, interest rates have skyrocketed,” said Maier, Senior Director in Stan Johnson Company’s New York office. “For owners who had previously been unable to defease their loans, once interest rates shot up and the prepayment penalties went down, it created a rare opportunity to finally be able to capitalize on the cap rate price with a reduced prepayment penalty. Our client saw the perfect window to sell this high-quality asset with plans to exchange into a variety of retail and medical assets to diversity their portfolio.”   The property was originally built in 2006 and is situated on a 7.11-acre corner lot. Less than 40 miles northeast of Manhattan, the city of Stamford, Connecticut boasts strong demographics and rapid population growth. Neighboring businesses in the surrounding retail corridor include Home Depot, CVS Pharmacy, a Public Storage facility and numerous quick service restaurants, among many others.