Real International’s Successful Acquisition of $2.55 Million-Worth Commercial Real Estate Property on Behalf of its Client/Investor.
In August 2020, Real International successfully acquired for our Client a commercial real estate property with a fair market value of $2.55 million. In addition, the property came with a commercial lease assignment with a term of 11 years. The tenant of the commercial lease is a very famous American restaurant chain, Carrabba’s Italian Grill. Carrabba’s Italian Grill is owned by parent company Bloomin’ Brands, Inc. Bloomin’ Brands has a Moody’s Ba2 credit rating and its annual earning exceeds $4 billion.
After numerous qualitative and quantitative analysis, Real International carefully selected this property largely based on its remarkably high profit return rate. This property has a considerable potential for value increase and provides a stable cash flow in the meantime, the combination of which perfectly meets our client/investor’s investment expectations. Congratulations to our Real International Team! As a result of their second-to-none expertise and incomparable understanding of the market, Real International had again assisted our client to secure a worthy real estate investment transaction.
Below is a detailed description of the above transaction:
- Background: The pandemic did not negatively affect Austin’s housing market. With many high tech companies coming to Austin, low inventory and high demand has created a competitive market. It is not uncommon to receive multiple offers for one listing, which leaves the reaction time very short for a real estate investment company.
- Except for residential real estate investment, commercial real estate is always the best choice for high networth investors because it usually means long-term tenants and low maintenance cost. In particular, commercial real estate that comes with a famous tenant proves to be even a better option, which is rarely seen on the market.
- Real International has an excellent team, including a Certified Commercial Investment Member(CCIM), who strives to bring our clients satisfaction with their best efforts and assists our clients to increase their wealth or preserve their value through real estate investments. Our CCIM utilized his/her professional connections in the process of this transaction, which made it possible for our client to acquire this piece of commercial real estate at a lower price with 6.5% cap rate.
- This is a great investment as a rental property because the property can provide a stable source of income through rents and has a low maintenance cost. The tenant is a famous American restaurant chain, who has rented this property since 1994 when the property was first built and the lease has a remaining term of 11 years. The tenant is owned by parent company Bloomin’ Brands, Inc. Bloomin’s Brands has an earnings growth rate of 8.60% year over year and has about 93,000 employees worldwide. Recently, several institutional investors and hedge funds decided to increase stakes in Bloomin’ Brands, including BlackRock and Vanguard. They increased their positions by 114.88% and 4.71% respectively in the first quarter of 2019.
- The property is located in N.W Austin (zipcode: 78759), where the average income of residents in this area has reached $108k per year. Greater Austin has a diverse economy, with education and government activity being the primary sectors of employment. The five-county MSA had a gross domestic product of $146.8 billion in 2018, making it the 35th largest metropolitan economy in the U.S. The MSA’s favorable labor market conditions have attracted many prominent companies and have pushed unemployment down to a historic low. Considering the location, future prospect, high profit return rate, and maintenance cost, this opportunity is very attractive to many investors. This opportunity is absolutely suitable for Real Holding’s clients, considering that it comes with a long-term tenant and the tenant pays for NNN fees.
- Detailed information of the property:
- Property type: commercial real estate property with a long-term tenant.
- Investment type：NNN Net Lease
- Tenancy: Single
- Location: N.W. Austin, 78759, Austin Texas.
- Lot size: 6,528 sqft.
- Year Built: 1994.
- Current tenant: a very famous American restaurant chain, Carrabba’s Italian Grill.
- Surrounding environment: close to many shopping malls and famous employers.
- Price sold: $2.55 million.
- Cap Rate: 6.5%.
- NOI (Net Income): $164,735.
- Expected yearly cash return rate: 7.6%