JC Penney Warehouse Near LA Trades for $36.1 Million

Cityfeet.com / GlobeSt.com - May 15, 2008

A 440,538-sf single-tenant distribution center here has changed hands for $36.1 million, according to industry sources. An undisclosed client of UBS Global Real Estate acquired the 10-year-old development from FR/CAL Beta Northwest, LLC, a joint venture between First Industrial and CalSTRS.

Located near Interstate 5 within Crossroads Commerce Center, the warehouse was built in 1998 and substantially renovated for JC Penney in 2007. The building, 700 D’Arcy Parkway, has 32-foot clear heights and approximately 9,000 sf built out for office use. The 28-acre property includes eight acres of yard area for trailer parking.

JC Penney is currently paying a net rent on the warehouse of $4.23 per sf per year and another $1.19 per sf per year for the trailer parking lot, according to an industry source. The non-cancelable lease runs through 2023 and includes 6% compounding escalations every three years. JC Penney also is paying a 2% annual management fee.

The current net income from the property is $2.27 million. Given the $36.1-million purchase price, the initial cap rate on the transaction is approximately 6.3%.

“We started marketing the property in the September-October timeframe, right after the market had changed, when there was still a tremendous amount of uncertainty,” listing broker Andrew Sandquist of CB Richard Ellis tells GlobeSt.com. “But this is an institutional quality asset in an institutional market that is net leased long term, and investors are still looking for high-quality product and are willing to pay for it. We’re very pleased with the result.”

Sandquist heads up CBRE’s national sale-leaseback group from his office in Chicago. Joining him on the listing were Robert Brennan and Jonathan Wolfe, also from Chicago, and Dave Haggerty of CBRE’s Stockton, CA office, in the disposition of 700 D’Arcy Parkway, Lathrop, CA. Sphere: Related Content