By Jon Peterson
The retail real estate market has rebounded strongly since the start of the COVID-19 pandemic, and some owners are looking to test investor interest in their properties. San Clemente, Calif.-based JL Management Company is one of these owners, and the company is planning to dispose of one of its shopping centers in the Central Valley of California. JL Management has put up for sale its 80,877 square foot Ash Tree Square property located in Fresno at 1089 East Shaw Avenue. The asking price for the property is $17.2 million, or roughly $212 per square foot, according to the property’s offering document.
The seller has engaged the Irvine, Calif.-office of Faris Lee Investments as the listing agent for the sale. Those involved in marketing the property include Alex Moore and Sean Cox, both directors with the firm, and Donald MacLellan, managing principal.
Current ownership has held title to the property for the past six years. It had acquired the asset for $13.75 million in April of 2016, according to public records. During the time that it owned the property, JL Management invested almost $700,000 of additional capital to maintain the building. As a result, there will only be nominal deferred maintenance of the asset for the new owners.
Should the guidance pricing on the property be achieved, it will produce a cap rate of 6.84 percent, as written in the property’s offering document. This return would be based on the property’s current net operating income of $1.2 million. The NOI is projected to be increased to $1.4 million with a cap rate of 8.32 percent, once the asset is stabilized.
The current occupancy of the property is 86 percent. The largest tenant in the property is Ross Dress for Less. It currently has a lease in the building for 29,611 square feet, which represents roughly 37 percent of the asset’s total square footage. This tenant has taken up space in the property for more than 15 years and its store is considered to be one of the top sales performers in the region. The current lease with the tenant will expire at the end of December 2027. Ross also has three five-year options that it could exercise.
Another large tenant is CVS, which takes up 15,817 square feet or nearly 20 percent of the property. Orleans Furniture has a sublease on this space until the beginning of May 2023. Other significant tenants in the property are Starbucks, Wing Stop and Mountain Mike’s Pizza. There is an opportunity to parcel out the center and sell the two out-parcels of the Starbucks drive-thru and Mountain Mikes at significantly lower cap rates than the remainder of the property.
Ash Tree Square was first developed in 1972 and it was renovated in 2018. The parking operation at the property has room for a total of 318 cars. The shopping center is located adjacent to the Fashion Square Mall. This asset has been rated by Green Street Advisors as an A property. It has average sales per square foot of $874, compared to the local MSA average of $355. Its tenant lineup includes Apple, Macy’s, H&M, Sephora and Victoria’s Secret.
