This property is located in the booming metro of San Antonio, TX, is situated on a premier retail corridor, and is surrounded by tenants such as H-E-B, Walmart, Ross Dress of Less, Walgreens, and countless other national eateries. In 2020, two years prior to this transaction, the Matthews™ agent had listed the property on the market when Jack-in-the-box had 18 months left on the lease. Due to the nearly expired lease, lack of store sales reporting, and Jack-in-the-box’s poor performance in Texas, buyers were discouraged from buying it with such a high vacancy risk.
In 2022, Jack-in-the-box ultimately extended for five years thanks to the sales boost from COVID-19, where drive-thrus were the most reliable medium for takeout. This also translated into an influx of demand for quick-service restaurants with drive-thrus. This year, the seller decided to move forward with listing the property again with the Matthews™ agent to cash out and move into a long-term stable asset. The new challenges that arose once listing the property with the recent extension were (1) walking buyers through why the reduced store hours were not cause for concern for this location and (2) choosing the right buyer due to multiple competitive offers.
Due to the strong STNL market, the Matthews™ agent listed the property at an accurate and competitive price point that induced a beneficial bidding environment. Many of the buyers that came to the table were concerned with the store’s hours (This store closed at 5 P.M. instead of 10 P.M. or 24 hours like other San Antonio locations), but the Matthews™ agent was well versed with the history of this location and how the tenant operated that he effectively eased buyers’ concerns. Finding a buyer knowledgeable about the San Antonio area was a primary focus, as the store’s location was the biggest selling point.
Rather than selecting the first buyer that made a compelling offer, the Matthews™ agent suggested the seller allow offers to come in over the course of the week to properly issue a multiple counter LOI. This ensured that they didn’t issue a counteroffer that was worse than a potential starting offer.
Through this strategy, the agent generated several offers for the seller, ultimately selecting a buyer at the end of a 1031 Exchange who was familiar with Jack-in-the-Box and submitted an offer that was all-cash and at the seller’s list price. Due to the buyer’s tight 1031 timeline, the Matthews™ agent successfully negotiated a 7-day due diligence period and a 7-day closing period. In order to accomplish this timeframe, the Matthews™ agent ordered the title commitment prior to going into escrow, as well as instructed the seller’s attorney to submit the signed letter of intent to commence the tenant’s Right of First Refusal rights rather than wait for a purchase agreement. Once the buyer removed its due diligence contingencies, the only other hurdle that remained was the receipt of a clean tenant estoppel. Fortunately, the seller received the tenant’s waiver of its ROFR within a week, but the estoppel was not going to come in time. The seller’s counsel and the Matthews™ agent proposed a landlord estoppel instead (atypical in net lease deals), and the deal closed on the 14th day as planned. The seller was very impressed with pieces that the Matthews™ agent implemented to facilitate a 14-day escrow, as most net lease retail deals take 45 to 60 days to close.