NEWPORT BEACH, Calif. – RealSource Group, a national commercial real estate brokerage company focused on retail, healthcare, automotive and education properties, announced today that the firm arranged the lease-back sales of four Tommy’s Express Car Wash locations located in Georgia and Florida. The sale price was approximately $29 million.
RealSource’s Senior Vice President of Investment Sales, Austin Blodgett, in association with ParaSell, Inc., represented the seller, a high-growth Tommy’s Express Car Wash franchisee. The buyer was an institutional investor based in New York.
“This sale represented some of the highest, if not the highest, price per square foot sales for an express car wash sale-leaseback,” Blodgett reports.
“Tommy’s buildouts are larger tunnels and of the highest quality, so they are more expensive to build out and that was one of the main drivers for these higher rents and price points,” said Blodgett. “Also, this sale demonstrates how aggressive buyers are willing to be in order to acquire these assets right now. A year ago, the cap rates for single-tenant express car washes would have been 50 basis points higher or more for this size of an operator. However, due to the increased demand, the caps for express car wash deals nationwide continue to compress, and buyers are getting less intimidated by the rents these operators are paying, as long as the location’s sales can justify the rent.”
Blodgett said that this was the first sale-leaseback for this Tommy’s franchisee. “We were able to help walk the franchisee through the entire process — from procuring offers to achieve maximum pricing, all the way through escrow and to closing. Given the current market conditions, this operator was able to take advantage of getting a very high multiple on the sale of their real estate. And, like most of the larger operators that use a sale-leaseback strategy, the franchisee will be able to use this sale-leaseback capital to fund future growth opportunities,” Blodgett explains.
“The sale-leasebacks are a great alternative to traditional financing to fuel expansion,” adds Blodgett.
Blodgett notes that the buyer of the four Tommy locations has a deep interest in the express car wash industry and wanted to add to its existing portfolio of car washes. “Tommy’s Express Car Wash is a franchise brand, and this franchisee in particular, operates fewer than 10 units currently, but the chain is expanding at a rapid pace and the buyer could see the vision of Tommy’s long-term growth on a nationwide level,” Blodgett explained.
There are currently 15 express car wash deals on the market; more than half are sale-leasebacks and in the $4 million to $6 million range, according to Blodgett. “Due to the limited number of quality express car wash product presently on the market, when any new construction or stand-out acquisition opportunity hits the market, there are multiple offers. Oftentimes, these single-tenant express car wash assets will trade above the list price, which makes this an excellent time for potential sellers.”
Blodgett anticipates there will be new, quality express car wash sale-leaseback opportunities that will hit the market come second and third quarters of this year with some high-growth brands opening an abundance of new developments towards the middle of this year, and he expects that these cap rates will continue to compress further as demand remains strong.