Trends & Insights

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, recently completed the sale of a last-mile delivery station in Salem, Oregon. The property was a 129,760-square-foot former solar panel plant owned and operated by Panasonic. The Panasonic operation closed September 2017 and was acquired in March 2018 by facility turn-around specialist, the Reich Brothers of White Plains, New York. The Reich Brothers leased the entire facility to a Fortune 100 e-commerce company in the fall of 2019. Both Reich and the tenant did extensive renovations in the ensuing 12 months to customize the building. The buyer was SPC LLC, a prominent New Jersey owner and syndicator. The building traded for $28.25 million, setting a record for price per square foot in the state of Oregon. “Our client was pleased to acquire another high-profile industrial facility,” said Craig Tomlinson, Senior Director and Partner in Stan Johnson Company’s Tulsa, Oklahoma headquarters. “This deal is proof that investment-grade, single-tenant industrial properties of this size are no longer just an institutional play.” About Reich Brothers: Reich Brothers is a national industrial real estate investment group with 15,000,000 square feet under management across the United States and specializes in the repurposing of underutilized industrial assets for modern day manufacturing and distribution uses.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, announced that Chris Vitori has joined the firm as an Associate Director in Cincinnati, Ohio. With over 16 years of commercial real estate brokerage experience, Vitori specializes in advising clients on creating and growing wealth through transacting single-tenant net lease retail, medical and industrial properties across the Midwest and Mid-South regions. “As an advisor to net lease investors, I am proud to couple my many years of experience with Stan Johnson Company’s superb net lease brokerage platform,” said Vitori. “The company’s innovations in research, market exposure and collaboration expand my expertise to guide clients in creating and growing wealth by investing in net lease properties.” Prior to joining Stan Johnson Company, Vitori worked with Marcus & Millichap as an Investment Broker. He assisted private, corporate and institutional investors, as well as developers, franchisors and franchisees in obtaining the highest prices and best terms for their commercial assets. Vitori graduated from the University of Dayton with a degree in Mechanical Engineering and earned an MBA from Xavier University. He holds real estate licenses in Ohio, Kentucky and Tennessee. “We are excited to add Chris’s experience, work ethic and excellent client service skills to our team,” added Ryan Roedersheimer, Associate Director in Stan Johnson Company’s Cincinnati, Ohio office. “He is a great complement to our group that takes pride in providing the highest standards of professionalism. He will enhance our ability to meet the needs of our clients in Cincinnati and beyond.”

Originally published by GlobeSt   What figures to be an active Q4 2021 for healthcare real estate transactions got started on Day 1. Physicians Realty Trust is acquiring 15 Class-A medical office buildings located in eight states, comprising approximately 1,460,000 square feet, for $764.3 million. “Activity in the sector has remained consistently strong, although there is still a relatively limited supply of quality product available in the market, Toby Scrivner, Senior Director, Stan Johnson Company, tells GlobeSt. The Pending Acquisitions The portfolio is approximately 95% leased with a weighted average remaining lease term of approximately 7.4 years. Each of the 15 buildings are either located on a health system campus or are affiliated with a health system, and approximately 74% of aggregate leased space is attributable to investment grade health systems or their subsidiaries. “This limited supply, combined with increased cost of new construction, has bolstered the confidence of investors that existing tenants will likely renew, as well as providing certainty that owners will be able to increase rental rates,” Scrivner said. “PRT has historically been a very competitive buyer of on-campus-adjacent medical buildings, and this portfolio appears to have many of the hallmarks of assets that fit their criteria.” Mike Adams, Managing Director, Stream, tells GlobeSt that medical office investors are looking for steady cash flows and well positioned real estate. “Well positioned real estate is located next to major health care systems,” Adams said. “We are seeing an overarching theme of limited supply of medical office real estate. Since COVID-19, there has been a greater need for medical office space and this has led to some conversion opportunities for operators that have entrenched relationships in the market.” He said a trend he is seeing among health care systems and hospitals is “the openness for them to tap third-party ownership and management of their real estate. This has led to a flood of institutional investors taking down these deals in large sums.” PRT Sees 4.9% Cash Yield on Portfolio For PRT, upon closing, the first-year unlevered cash yield of the portfolio is expected to be 4.9%. The company expects that the transaction will be completed by year’s end. At closing, PRT anticipates funding the purchase of the pending acquisitions through the issuance of units of the operating partnership, the assumption of indebtedness on certain properties, the satisfaction of existing mezzanine loans outstanding, and proceeds from its unsecured line of credit, according to a release.  

Excerpt of article originally published by GlobeSt Lanie Beck, Director of Corporate Research, Marketing & Communications, Stan Johnson Company, tells GlobeSt that its preliminary data for Q3 2021 indicates healthy investor activity over the summer for the single-tenant net lease market. Projections put total investment volume for the sector between $14.8 and $16.5 billion for the quarter, which would fall just shy of the quarterly five-year average and look like a near repeat of Q1 2021. Overall average cap rates for net lease assets are likely to compress by a few basis points as they approach the 6 percent-mark, putting the average at an all-time low. “For pricing, the most notable trend we’re watching is within the net lease industrial sector, where cap rates have been in the high-5 percent range for six consecutive quarters now,” Beck said. “Demand for newly built, high-quality distribution properties continues to be incredibly robust as both institutional and private buyers seek out these assets, and the cap rate compression we’re seeing is a direct result. “But supply across all asset classes remains a challenge for investors. The appetite for net-lease investments is growing, and I have no doubt that we’d be seeing higher levels of investment volume if only the supply existed.”  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a single-tenant industrial asset located at 1921 Southwest 44th Avenue in Ocala, Florida. A Florida-based developer sold the 193,750-square-foot industrial build-to-suit it just completed for Signature Brands. The building sold for $20.7 million and came with a long-term net lease to Signature Brands. The high-bay distribution warehouse will serve their adjacent production facility. The buyer was LBA Logistics, an Irvine, California-based developer and institutional fund manager. LBA has complementary assets in both Orlando and Tampa, and the property fit their aggressive Florida expansion plans. Craig Tomlinson of Stan Johnson Company represented the seller. “We were over-run with interest on this asset,” said Craig Tomlinson, Senior Director and Partner in Stan Johnson Company’s Tulsa, Oklahoma headquarters. “It sold as if it were an investment-grade tenant in Orlando – a real testament to the depth and competitive state of Florida industrial.” Signature Brands is a 70-year-old specialty and seasonal decorations maker including the ubiquitous Betty Crocker, PAAS and Cake Mate brands.

Originally published by GlobeSt Healthcare is among the new hot investment assets, following the shake up from the pandemic. This year, healthcare pricing is nearing record levels, and cap rates are trending down, according to Scott Briggs, Senior Director and Partner at Stan Johnson Company. Briggs will speak on the topic at the upcoming GlobeSt.com Net Lease conference on October 28, 2021. “During the pandemic, with 1031 exchanges already underway and dry powder at all-time highs, that affinity became necessity as many net lease tenants sought rent relief from landlords as governments initiated public shutdowns relief—a move that sent investors and lenders reeling at the potential of what was to come as the unknown played out,” Briggs tells GlobeSt.com. “This dynamic convergence of needs caused demand for healthcare product to surge which sent prices even higher given the certainty of continued rental payments afforded by most healthcare users as net lease tenants.” The accelerated demand was true of many trends during the pandemic. In the net lease space, industrial is the asset that was really set on fire. “The pandemic accelerated already prevalent trends in the net lease space,” Briggs says. “Pre-pandemic, net lease investors exhibited an evidenced affinity for net lease product that was well-aligned with technological advances by market disrupters such as Amazon and other e-commerce providers or net lease product that was well-insulated from macroeconomic movements.” However, while industrial demand may be getting most of the attention, Briggs says that activity in the healthcare space is rivaling the monster asset class. That’s because industrial has a higher barrier-to-entry for investors. “Demand for net lease industrial product might be slightly higher, but deal sizes often preclude the average net lease investor from participating in that segment of the market directly. The accelerated trend in healthcare has not only sustained since the start of the pandemic, its pace has continued,” he adds. “Demand for most of the net lease healthcare product that we are listing and marketing today is as high as I can remember it being, and cap rates continue to trend downward.” Investors entering the market could have to navigate some regulatory challenges ahead, however, that could impact momentum. “The current topic of concern pertains to changes in Medicare or changes in tax policy that might cause a dynamic shift in supply and/or demand in net lease healthcare,” says Briggs. “This unease has yet to cause a noticeable sobering effect to the broader healthcare party, however. I anticipate the 2022 results—at least from a fundamental valuation perspective, as opposed to a pure volume or transaction count perspective—to exceed those experienced in 2021.” In fact, Briggs expects healthcare activity to remain strong well into the future, saying, “Until there is some systemic and dynamic geopolitical or macroeconomic shift and a reversal of the interest rate and cap rate trends we are experiencing, healthcare net lease will remain a priority for most private and institutional buyers for the foreseeable future.”  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Thomson Plaza located at 308-324 West Hill Street in Thomson, Georgia. The property is comprised of a 96,495-square-foot retail center situated on more than 10.5 acres, and it was 98 percent leased at the time of sale. The seller, Thomson Plaza LLLP, was represented by Doug Clyburn and Julie Clyburn of Stan Johnson Company. A private 1031 exchange buyer from Statham, Georgia purchased the asset for approximately $3.3 million. “We represented the seller, a local family, who has owned the property for more than 49 years,” said Doug Clyburn, Associate Director in Stan Johnson Company’s Alpharetta, Georgia office. “Thomson Plaza has a history of stable occupancy and enjoys outstanding visibility and access, along with favorable lease economics, all of which were attractive to the purchaser.” Thomson Plaza is a KJ’s Market IGA grocery-anchored community center consisting of a mix of local and national tenants including Bealls Outlet, Family Dollar, Aaron’s and Subway. The 13-tenant property is located 33 miles west of Augusta, Georgia and was originally constructed in 1972 with renovations occurring in 1990.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a single-tenant retail property located at 14615 Glazier Avenue in Apple Valley, Minnesota. The 12,194-square-foot early childhood education building is fully leased to Jardin Academy on a long-term triple net lease. Stan Johnson Company’s Milo Spector represented the seller, a local developer named Frauenshuh, Inc., who developed the property build-to-suit for the Jardin Academy. A local private buyer purchased the property for approximately $5.0 million reflecting a 6.48 percent cap rate. “What makes this transaction special is that despite Jardin Academy not being a ‘household’ name in the net lease childcare segment like KinderCare or Learning Care Group, we were still able to get this property sold above asking price for about the same kind of cap rate as some of the major players in the space,” said Milo Spector, Director in Stan Johnson Company’s Walnut Creek, California office. “An assignment like this really puts our team to the test in terms of marketing something new and educating buyers on why the deal makes sense, including the market fundamentals and quality of the physical asset developed by Frauenshuh. I’m proud to say we did just that on this listing and inherently increased the value for property owners with Jardin as a tenant due to the strong cap rate we achieved.” The property was built in 2021 and is situated on 0.93 acres. The site features a 3,000-square-foot outdoor playground area and is licensed to accommodate more than 135 students from infants to pre-kindergarten years. The property is located just 20 miles from Minneapolis and draws from a rapidly growing population with strong demographics in the surrounding area. The property won the NAIOP MN Chapter Award of Excellence in the Special Purpose category.