NEC Interstate 40 & Highway 15, Durham, NC

Price $1,800,000
Size 7,500 SF
Price per SF $240
Cap Rate 5.5 (A)
Occupancy 100%
Year Built 2005

(A) = Cap rate based on actual income at stated occupancy

I had a relationship with a buyer in a 1031 exchange that specifically wanted a newer restaurant on a ground lease to a national corporate tenant in a good location with replaceable rents. I found just that in Durham, NC. The property is on the intersection of two highways with major destination power centers on two corners. The subject pad is on a prime pad in front of Wal-Mart, Old Navy, Marshall’s, Best Buy, OfficeMax, Barnes & Noble and Dick’s Sporting Goods. Home Depot, Kohl’s, Bed Bath & Beyond, PetSmart & DSW are in the center across the street. The property is strategically located in “The Triangle” in the middle of Duke University, University of North Carolina and North Carolina State University. The rent, at $13.20/sf was low and easily replaceable. There were rent bumps every five years with the next one coming in only 2.5 years. The tenant had exercised its first option two years early. There were some large rent increases in the option years. The buyer made a full price offer shortly after I told him about it. He thought this was one of the best single tenant deals he had ever seen. The buyer would have closed in 30 days but the seller asked for 60 days so he had extra time to look for his own exchange property.