Was there a more wild moment in commercial retail investing during the last couple of years of cap rate madness than when this happened? Walt Brown made $1,700,000 for holding an In-N-Out Burger ground lease in Las Vegas for 96 days. That equates to a profit of $17,708.33 per day.
The site was located at the southeast corner of Russel road & Polaris avenue. The Lot is 1.75 acres in total. The site is located 1.0 mile from the iconic I-15 & Tropicana In-N-Out and is across the street from the Raiders Stadium. Of which the owner of In-N-Out, Lynsi Snyder is a die hard fan by the way.
Brown bought the site on 12/16/2020 at a 3.7% cap from EJM Development which is a total purchase price of $10,800,000. The rent for the ground lease at year 1 was $400,000. The site has such a nice location across from the Raider Stadium that after just 3 months of Brown holding the property he was able to sell it to A&A Lee Family Limited Partnership at a 3.2% cap rate That calculates out to a purchase price of $12,500,000! $1,700,000 over what he had paid for the site just three months earlier.
The most amazing part of this story is that during the entire period that this happened the site was not even complete. Rent had commenced and the location had plans to open but, the physical building wasn't even complete and was trading hands quickly at amazingly low cap rates.
This story is a prime example of the power of location and high credit tenants in the retail space. It is often amazing to see the difference that a certain tenant can have on a project. Some are treated better by cities and have an easier time in their development process simple because of how the company is run and the economic boost that a particular tenant can bring to a city.
The location of the site is also key here because it is so close to a landmark site in the city. Allegiant Stadium is a focal point for the city and as such the land around the stadium is often held in a higher regard with people seeing it as a strong indicator of future success. Just goes to show that the market recognizes great tenants and great locations in retail and those particular project will continue to provide amazing opportunities like the one that Walt Brown had to make $1.7M in a mere 3 months of holding a particular property.
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