Digital Journal– 11/2/2021
RealSource Group, a national commercial real estate brokerage company focused on retail, healthcare, automotive and education properties, announced today the sale of a brand-new, single-tenant net-leased investment occupied by 7-Eleven and a fuel station in North Naples, Florida. The sale price was $5,610,766, representing a cap rate of 4.30%.
RealSource’s Vice President of Investment Sales, Austin Blodgett, along with ParaSell, Inc., represented the buyer, a private investor based in Los Angeles, California. The seller was Creighton Development in Fort Meyers, Florida, and was represented by John Beckman of Retail Site Experts.
“This was a development flip by the developer in an established shopping center in a very affluent area with high-traffic counts and many rooftops,” said Blodgett. “RealSource Group exclusively represented the buyer and generated this off-market transaction opportunity as a result of our outreach to our national network of developers and brokers to meet our buyer’s financial objectives.”
Blodgett continues, “The purchase of a gas station/c-store allows investors to capture the bonus depreciation benefits to offset gains in that tax year. This was the main driver for this group to purchase this asset class as this strategy can create millions in tax savings and, in the case of 7-Eleven, you have an investment grade tenant on the lease, which is considered one of the most secure investments available.”
The new 3,155-square-foot building, which opened in early October 2021, is located on 0.80 acres at 10861 Airport-Pulling Road North in Naples, near the signalized intersection of Immokalee Road (Route 846) and Airport-Pulling Road North in the Green Tree Center. The 20-acre shopping center is anchored by CVS Pharmacy and includes NCH Whitaker Wellness Center, Lake Michigan Credit Union, The UPS Store, Taco Bell, Wendy’s, Planet Smoothie, and others. 7-Eleven is also situated directly across the street from a Sam’s Club-anchored shopping center.
“Green Tree Center is currently undergoing extensive remodeling,” said Blodgett. “The NCH Healthcare System has been reported to be spending millions of dollars to renovate its 40,000-square-foot facility, which is located in the shopping center. Covered outdoor seating with water fountains and fire pits have been added to the existing restaurant lineup that stretches from Boston Beer Garden to Joey D’s Restaurant and Bar. Scoops Ice Cream & Acai Bowls joined the local dining row that includes LuLu B’s Diner, Black Forest Restaurant and Em-On’s Thai Cafe.”
Convenience stores with a gas station are an extremely favorable asset type due to the tax advantages of using the 100% bonus depreciation benefits to offset the investor’s ordinary income and capital gains, according to Blodgett. Therefore, many buyers of c-stores with a gas station will typically have a short-term hold and will continue to buy and sell these assets to capitalize on this tax strategy year after year, Blodget said. “Fears that the bonus depreciation law is still set to expire at the end of 2022 is helping to fuel demand for this asset type and thus setting new record pricing across the nation,” Blodgett noted.
“Out of 229 all-time record 7-Eleven sales in Florida, only seven other sales traded at a sub-4.30% cap rate, and all of those sales were within the past 18 months, according to CoStar,” Blodgett continues. “The current record-low cap rate for a single-tenant 7-Eleven in Florida was sold just a month ago at a 4.05% cap. This shows how aggressive buyers have gotten on these assets over the last year or so, and we expect cap rates to continue compressing both in the Florida market as well as nationwide, especially for brand-new 7-Elevens with a gas station.”