Phoenix, AZ – Matthews Real Estate Investment Services™, the nation’s fastest-growing commercial real estate firm, announces the sale of a Safeway in Lake Havasu City, AZ for $13.24M. The transaction was brokered by Associate of Multifamily Taylor Avakian, Associate Vice President of Multifamily Charles Wright, Executive Vice President & Managing Director Chad Kurz, and Vice President & Director Braden Crockett, who led the transaction.
The address of the single-tenant grocery store property is 1650 McCulloch Blvd N., Lake Havasu City, AZ. Safeway Inc. operates as a banner of Albertsons Companies, one of the largest food and drug retailers in the United States. With both a strong local presence and national scale, the company operates stores across 35 states and the District of Columbia under 20 well-known banners. The 54,531 square foot Safeway in Lake Havasu City is in a shopping center next to a United States Postal Service as well as national tenants including Jack in the Box, Jersey Mike’s Subs, and Walgreens.
“The acquisition process began during the height of the COVID-19 pandemic which provided a unique set of challenges to navigate, while still achieving our client’s main goal to transition from multifamily towards a passive ownership model through the ownership of single-tenant NNN assets. We regularly advise clients to target recession-resistant and e-commerce resistant tenant types but with the emergence of the global pandemic, we now faced a trifecta of risks (COVID-19, e-commerce, & a possible recession) that directly impacted STNL retail tenant financial health. COVID-19 has had an accelerated impact on already existing trends, it plunged the economy into a technical recession and transitioned more consumer shopping to e-commerce platforms. With a rapidly evolving global health crises, we knew it would be critical to target essential business models. Multifamily investors often claim multifamily is a more secure asset class because people will always need a place to live. My response to that is true, but people will always need to eat! Thus, STNL grocery assets were the obvious choice to target,” explained Vice President & Director Braden Crockett.
“However, long term high performing credit worth STNL grocers are not an easy asset to find and have a significantly lower transaction velocity considering grocery tenants are typically sold as part of a grocery-anchored center. Luckily, we knew from prior dealings that the seller of this asset was in the process of divesting their grocery portfolio piece by piece. By leveraging our industry knowledge and persistently stayed in touch with the seller, we were able to close all cash, 45 days earlier than the originally scheduled close date,” said Vice President & Director Braden Crockett. “We achieved an excellent price for the seller and exceeded the buyer’s expectations by more than fulfilling their original investment criteria.”
The seller’s motivation was to execute the exit strategy portion of their original business plan. The sellers originally acquired a nearly $1B portfolio of grocery stores directly from Albertsons as part of a large sale-leaseback portfolio. Their plan was to act as a market maker by providing liquidity to corporate America to cash in on their real estate holdings with the intent to cash flow on the assets before initiating their exit plan. The premise behind their strategy was to capture the arbitrage created by selling the assets individually at compressed cap rates. The buyer was sourced by the Matthews™ team and was in a 1031 exchange after selling a large multifamily building in Los Angeles, CA. Buying a grocery store on a 20-year lease, left the buyer with an asset that will provide them with security. Corporate backed grocery stores are recession resilient, e-commerce resistant, and pandemic proof assets.
“This assignment was executed through a true team effort. The buyer was originally referred to me through our multifamily platform, with the realization that a retail expert would be able to provide an immense amount of value to their clients,” said Vice President & Director Braden Crockett. “I ultimately was able to effectively advise them to navigate the pandemic’s labyrinth of issues that presented a direct effect on nearly every asset class across nearly all CRE investments but specifically hit retail assets the hardest. In the end, we were able to overcome all of the challenges we faced by successfully sourcing an off-market grocery store at a phenomenal price with nearly a 20-year absolute NNN lease that provided for annual rent escalators.”
For more information regarding the Safeway in Lake Havasu City closing or if you have any other questions related to net lease retail assets, please do not hesitate to reach out to Taylor Avakian, Charles Wright, Chad Kurz, and Braden Crockett. To view current listings, please visit www.matthews.com.
About Matthews REIS™
Matthews Real Estate Investments Services™, the nation’s fastest-growing commercial real estate brokerage firm, holds recognition as an industry leader in investment sales and leasing. Headquartered in El Segundo, CA, and strategically positioned with over 200 agents and 50 support staff in 10 offices across the United States, Matthews™ continues to focus on expansion into new markets. For more information, please visit www.matthews.com.