Closed $798,000 Asking Price - Single Tenant
This offering consists of an absolute NNN lease of a 6,000 square foot building by Cash America Pawn (First Cash) and an adjacent Crown Castle Cell Tower ground lease.
The Cash America Pawn building was built in 1980 and operated by an independent pawn shop owner who had his own store there from 1989 until selling the business to Cash America in 2010. An absolute NNN lease was executed between the parties when the sale closed. The lease is for ten years and has two five-year options each having 10 percent increases. The primary term expires on December 31, 2020. In 2013 the Cash America company was purchased by First Cash, a New York Stock Exchange listed corporation listed under FCFS.
The property is located at 11260 South Wilcrest in the southwest area of Houston, Texas. It is just north of the South Wilcrest/West Bellfort intersection. Both streets are less than half a mile from Southwest Freeway. The immediate area includes apartments, single family homes, shipping centers, and warehouses as well as freestanding businesses. Wilcrest is a major north/south thoroughfare that runs from I-10 (Katy Freeway) to Highway 69 (Southwest Freeway) where it becomes FM 1092 (Murphy Road) in Stafford and continues through Sugar Land.
The neighborhood is densely populated. The demographics for 2016 show 18,200 people in a one mile radius and 163,962 people in a three mile radius. The West Bellfort Avenue and Wilcrest Drive intersection enjoys a traffic count of 68,349 vehicles per day with 29,107 vehicles on Wilcrest Drive south of West Bellfort Avenue and 39,242 vehicles on West Bellfort Avenue west of Wilcrest Drive. The average household income is $47,762 and $57,311 in a one and three mile radius respectively. Pawn shops flourish in this type of demographic being middle class and populous with high traffic.
The Cell Tower Ground Lease consists of a right to an easement for the cell tower owner to place it and access it as needed. Created in March of 1997, the original lessee was Sprint who sold the tower to Crown Castle in March of 2006 and still uses it. The lease is for 25 years and has automatic 10 percent increases every five years. It is in its final period and paying $7,906 per year. There are five additional options with 10 percent increases which could extend the lease until 2047.
Offered at $798,000, the Pawn Shop Building and Cell Tower produces a 7.76 percent CAP Rate on an annual basis. Today’s $61,900 NNN cash flow grows to $67,300 in 2020 considering the Pawn Shop renewal at a fixed 10 percent increase. This results in a CAP Rate of 8.43 percent at list. All options for both the Cell Tower and Pawn Shop are at 10 percent every five years producing incremental future returns.
This investment offers two stable businesses with a solid history as well as the potential for a growing cash flow.
- CAP Rate: 7.76%