MarketWatch.com – 3/7/2023
NEWPORT BEACH, Calif. – RealSource Group, a national commercial real estate brokerage company focused on retail, healthcare, automotive and education properties, announced the firm completed the sale of a single-tenant property occupied by Grease Monkey in Monument, Colorado, a town in El Paso County, approximately 50 miles south of Denver. The sale price was $3,062,555. The sale achieved the highest reported purchase price for a Grease Monkey in the past three years.
RealSource Group’s Senior Vice President of Investment Sales Austin Blodgett and Analyst Jonathan Schiffer, in association with ParaSell, Inc., represented the seller, a private investor based in Monument, Colorado. The buyer was a private real estate investment firm based in Houston, Texas.
The 5,309-square-foot building is located on a 0.43-acre parcel at the hard corner, signalized intersection of Colorado State Highway 105 and 2nd Street at 213 W. Highway 105 in Monument. The building was built in 1995 and renovated in 2007 and is located just off Interstate 25’s 2nd Street exit, with 73,000 cars per day on Interstate 25. Neighboring tenants include Safeway, Walgreens, 7-Eleven, Starbucks, McDonald’s, Taco Bell, Arby’s, and many more.
“We generated multiple offers within the first few weeks of marketing the property for sale and procured an all-cash, non-1031 buyer for a quick closing,” Blodgett said. “The new 10-year initial lease term with 10% rental increases every five years guaranteed by the nation’s largest privately-owned franchisor of oil change centers was very appealing to investors.”
Blodgett reports that the property is unlike anything that was on the market. “In addition to the strong real estate, this site had an express car wash attached to the lube center, which is not only a source of added revenue for the tenant, but also provides bonus depreciation benefits for the buyer. An express car wash is not something you would normally see on an oil change site like this one.”
The property seller once owned an oil change and car wash business on the site. “The seller sold his business to Grease Monkey a few years prior but kept the real estate and signed a new long-term lease with Grease Monkey,” Blodget remarked. “The seller felt now was the best time to sell the property and exchange it for a longer lease-term property with zero landlord responsibilities for his retirement.”
Blodgett continues, “The buyer wanted to add to its robust, diversified portfolio of net lease investments and acquired the asset to continue its goal of providing sustainable returns to its investors. The buyer had purchased a few Grease Monkey-occupied properties in the past and likes Grease Monkey’s growth and stability and believes in the longevity of the automotive industry.”
According to Blodgett, the buyer plans to hold the property in its portfolio as a long-term, cash-flowing investment.
“We were able to maximize the value of the real estate to execute a quick marketing period, escrow and closing,” said Schiffer. “This sale achieved the highest reported purchase price for a Grease Monkey in the past three years. The closing cap rate of 6.90% for the property is in line with where other Grease Monkeys have traded before 2022.”
Schiffer adds, “This sale demonstrates that the retail investment market is still active for single-tenant net-leased properties, even in the smaller markets like Monument, Colorado. The sale also proves that RealSource is able to achieve a premium price for clients, regardless of the current economic environment.”
Grease Monkey, along with sister company SpeeDee, are part of FullSpeed Automotive®, one of the largest and fastest-growing quick lube organizations not owned by an oil company. Based in Denver, Colorado, Grease Monkey has been in operation since 1978 and has almost 500 stores in the U.S. and China, Colombia, Mexico, and Saudi Arabia. Founded in 1980, SpeeDee has 185 stores in the U.S. and Mexico.
“One of the reasons that companies like Grease Monkey® are a great investment opportunity is because more than 99% of the vehicles on U.S. roads need regular oil changes. And, while electric vehicles are very slowly gaining market share, it may be decades before they make up the majority of cars on the road in the U.S.,” noted Blodgett. “Electric vehicles may not need engine oil, but they still need brake fluid, coolant, brake pads, tires, cabin air filters, and other routine maintenance items that Grease Monkey can currently provide.”