The subject property is a freestanding veterinary clinic tenanted by a multi-state veterinary operator, Pathway Vet Alliance. The property owners had operated their practice here for years, and in 2018 they made the decision to sell their practice to Pathway Vet Alliance. Pathway received a well-positioned and already established veterinary business, and the owners received a NNN lease guaranteed by one of the strongest operators in the veterinary industry. The property is well located, situated off the corner of Rosecrans and Studebakerk Road, which provides great visibility and strong intrinsic value. Demographics around the property are strong, with incomes over $85,000 and a population of over 263,000 people within a three-mile radius. The owner was looking to sell in order to elimate management responsibilities.
At the time of the sale, the biggest concern for the subject property was that the veterinary real estate market was in its beginning stages. As many investors began looking for alternative net lease investments, many took a liking to invest in healthcare assets, but only a few had any real understanding of the veterinary space.
In order to achieve aggressive pricing for the seller, Matthews™ began by educating the buyer pool on the viability and strength of the asset. This involved handing out numerous pieces of content and data to the investor market, educating them on the security of the space and outlining the success of many tenants, including Pathway Vet Alliance. Veterinary real estate assets have similar fundamentals to many traditional NNN retail properties, such as NNN leases, annual rental increases, and strong guaranties from established operators. The upperhand the veterinary industry has is that it is impervious to both e-commerce pressures and outpacing economic pullback.
Ultimately, Matthews™ achieved a market-setting cap rate for the clients and perfectly positioned them to exchange into a long-term NNN asset in Florida. The sellers were able to seamlessly transition from owning and growing a profitable business in California, to becoming a landlord of that building, into owning a brand new NNN investment in Florida.
“We had been receiving emails from Matthews™ for several months and had been impressed with the level of detail they’d provided about commercial real estate opportunities. Then one day, they sent out an email that featured a veterinary clinic, and that really caught our eye. We also owned a veterinary clinic and had sold the practice the prior year to a solid tenant.
We had moved to Florida from California the year we sold the practice, and as we were driving our motorhome through Idaho and Utah in the Fall of 2019, we had quite a bit of time to talk and reflect. We realized that if we had an opportunity to bring our real estate investment closer to where we now, lived we would be more comfortable. So, while driving our bus, we called Michael Moreno and Rahul Chhajed at Matthews™ to see whether it was possible to participate in a 1031 exchange for property closer to Florida.
From the start, we could tell that Michael and Rahul were very knowledgeable about the market for NNN Commercial leases. And the great news? Michael was able to send us a list of possible investments in Florida, and provide us with a valuation for our California property. Once we received what he thought was the best strategy to move forward on marketing our property, we decided it was an opportunity we couldn’t pass up. He explained to us how properties in this class are valued. The valuation was about 30% more than we’d estimated or even hoped for.
Michael’s availability to answer questions and guide us through the process was unparalleled. In the past, we’d sought out commercial properties to establish veterinary practices in, and we’d be lucky to receive a call back from a commercial broker—even the ones who were supposedly representing us, not so with Michael. He seemed to be available whenever we had a question, whether by email, text, or phone.
From the time we called Matthews™ and inquired about the possibility of selling, to the time we closed the sale of the first leg of our exchange was 60 days. 60 days after that, we identified and closed on our exchange property. We are feeling really confident about our choice of a NNN Commercial property with a well-qualified Corporate tenant. It all started with a call to Matthews™ and a 20 minute conversation with Michael and Rahul.”
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