An Orange County–based developer has sold a new-construction, single-tenant retail property occupied by Del Taco at 51 East Ramona Expressway in Perris, California, to a private Los Angeles–based investor for $1,364 per square foot. The price of $2.81 million represents a 4.07 percent cap rate — a record-low cap rate for a single-tenant Del Taco in Riverside County.
Hanley Investment Group Real Estate Advisors (HIG) senior associate Eric Vu and EVP Bill Asher, along with president Ed Hanley, represented the seller in the transaction. Paul Bahk at Realtex Properties Inc. of Los Angeles represented the buyer.
The property’s corporate-guaranteed, absolute, triple-net lease has more than 18 years remaining on its 20-year initial term. The freestanding, 2,060-square-foot Del Taco, which was built in 2016, has a drive-thru. It is located on a 0.36-acre pad to the newly renovated Expressway Center shopping center at the signalized intersection of Ramona Expressway and Perris Boulevard, which has a combined estimated traffic count approaching 70,000 cars per day. The property is easily accessible via I-215. Average daily traffic counts at the Ramona Expressway exit on Interstate 215 are 145,000 cars per day.
Vu tells SoCal Real Estate exclusively, “With 21 consecutive quarters of revenue growth, Del Taco’s past perception of suspect credit has become a short-term memory as the chain has elevated itself again to achieving values similar to other recognizable fast-food brands such as KFC, Taco Bell, and Jack in the Box.”
Vu adds that although retail real estate investors tend to flock to investments located in coastal cities, “the Inland Empire has continued to be a desirable alternative and proves that demand for Southern California real estate overall remains strong in today’s market.”
In a statement, Vu said that the sale achieved the lowest cap rate for a Del Taco in the Inland Empire in the last two years and one of the lowest cap rates of all time for a newly constructed Del Taco in Riverside and San Bernardino counties above $2.5 million, according to CoStar.
“This was a highly sought-after single-tenant investment due to the initial long-term corporate lease combined with the high-traffic signalized intersection location,” Vu said. “Del Taco is highly visible from the corner of Ramona Expressway and Perris Boulevard, two well-traveled thoroughfares that connect Perris to Moreno Valley and includes immediate accessibility to a strong daytime workforce generated from approximately 18.2 million square feet of nearby distribution centers.”
The property is positioned in a recently remodeled, 100-percent-occupied shopping center that includes a dedicated signalized entrance to the property on Ramona Expressway. Notable co-tenants in the retail center include Farmer Boy’s, Lake Perris Market & Deli, Metro PCS, and Mobil Gas Station. The property is also located adjacent to May Ranch, the largest master-planned community in Perris. It encompasses approximately 745 acres, 4,500 households, 19,000 people, three schools, and three community parks. May Ranch’s population is estimated to grow by 35 percent by 2022.
“Through HIG’s strategic marketing efforts, we generated five qualified offers in the first three weeks of marketing the property, secured a Southern California–based 1031 exchange buyer at 98 percent of list price, and negotiated a significant non-refundable deposit from the buyer upon opening escrow,” Asher said in the statement. “Investor response to this offering clearly demonstrated the continued demand for well-located, single-tenant fast-food investments like Del Taco.”
The Del Taco sale in Perris comes on the heels of other recently completed fast-food or quick-serve restaurant transactions by HIG, including, as SoCal Real Estate recently reported, Raising Cane’s in La Habra, California, which achieved the lowest cap rate ever nationwide.
“As the retail investment market continues to transition, investors are looking to high-quality retail properties for more security, better yields, and minimum management that is offered by single-tenant, corporate guaranteed, absolute, triple-net leases,” Vu said in the statement. “A single-tenant fast-food restaurant investment such as Del Taco provides long-term cash flow, with relatively low risk. As investors continue to look for security, we expect that the demand for these high-quality retail assets will remain strong through 2018.”