Regions Northern Virginia

Calkain Cos. brokers sale of McDonald’s ground lease for $2.9 million

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Calkain Cos., a national net lease real estate brokerage firm with an office in Reston, recently brokered the sale of a McDonald’s ground lease investment property in Fredericksburg.  According to the company, the 2-acre investment property was leased to McDonald’s on a triple net lease basis for 20 years, with structured rent increases and renewal options.

The sellers, a family interested in liquidating the asset in a compressed cap rate environment, and the private buyer were completing a 1031 exchange.  According to Calkain, the property sold for $2.9 million, with a cap rate of 4.5 percent.

Calkain’s Andrew Fallon, assistant vice president, represented the private seller. The property was introduced to the marketplace during the second quarter, allowing Calkain to facilitate the sale at a cap rate of 4.5%. “After recasting a new 20-year lease with McDonald’s, the seller was able take advantage of the compressed cap rate environment. We recognized that 2012 was going to be a seller’s market given the combination of low interest rates, investor flight to quality and the laws of supply and demand,” Fallon said in a statement.

The buyer was a California-based, 1031 investor seeking a passive replacement property. As a NNN ground lease, the investment requires that the tenant pay for real estate taxes, insurance, and maintenance expenses, which provides the landlord with a passive, bond-like income stream through commercial real estate ownership.


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