Levin Johnston of Marcus & Millichap has successfully guided a private investor in acquiring two newly constructed commercial properties for a total of $9 million. The assets, located in Texas and Florida, are both subject to long-term, absolute triple-net (NNN) leases with major multinational restaurant chains. This strategic reinvestment of capital aims to meet the investor’s tax and management objectives while diversifying their portfolio.
Key Takeaways
- A private investor acquired a Chipotle Mexican Grill in Florida and a Chick-fil-A in Texas for a combined $9 million.
- The acquisitions were part of a 1031 exchange, following the sale of a multifamily property in California.
- Both properties are leased to strong, national credit tenants on long-term NNN leases.
- The transactions align with the investor’s goals for passive income, tax benefits, and geographic diversification in tax-friendly states.
Strategic Investment in Prime Restaurant Locations
The acquired properties include a 2,493-square-foot Chipotle Mexican Grill in Lutz, Florida, within the Tampa Bay MSA, and a 4,944-square-foot Chick-fil-A in Austin, Texas. Robert Johnston, Executive Managing Director of Levin Johnston, highlighted the prime opportunity these well-located, new construction assets presented, leased to tenants with strong national credit.
These cash-flowing, passive investments are situated in tax-friendly states, supporting the buyer’s long-term wealth objectives and estate planning. The timing was also ideal for restructuring the portfolio to leverage new bonus depreciation rules, thereby unlocking additional value in real estate ownership.
1031 Exchange Fuels Acquisition
Adam Levin, Executive Managing Director of Levin Johnston, noted that the acquisitions were executed through a 1031 exchange. This process was initiated by the $9.3 million sale of a 24-unit apartment community in Redwood City, California. The sale of the San Francisco Peninsula multifamily property was influenced by the strong interest in well-located assets benefiting from San Francisco’s recovery.
The Redwood City location was attractive due to its proximity to major employers, transportation, and amenities. Strategic moves were made by both the seller and buyer to align with individual management, ownership objectives, and tax benefits.
Properties Poised for Long-Term Success
Both the Chipotle and Chick-fil-A locations are positioned for net operating income growth and sustained success. The Florida property, located in a major retail corridor of the Tampa area, features a rare 20-year lease with escalations every five years for Chipotle, the country’s largest fast-casual chain by annual sales. The Chick-fil-A in Austin, the first in the southeast Austin area, was developed by the corporation and is expected to serve strong demand for many years.
The Tampa Bay area boasts a population of 3.4 million and has seen 7% growth in the last five years. Austin continues its steady population increase, recently becoming the fourth most populous city in Texas. These transactions underscore a growing investor interest in commercial properties that offer passive income, require no landlord responsibilities, and provide geographic diversification in tax-advantageous states.
The Chipotle property is located at 10301 Cross Creek Boulevard in Tampa, Florida, and the Chick-fil-A property is at 7300 McKinney Falls Parkway in Austin, Texas.