A month after buying the Montgomery Mall for $55 million in a foreclosure sale, Kohan Retail Investment Group has put up for sale a Wegmans that is part of the property, and not far down the road at the Plymouth Meeting Mall PREIT has decided to market the space it has leased to Whole Foods Market on a long-term basis, the Philadelphia Business Journal reports.
It’s not unusual for owners of real estate to sell off parts of a larger property, PBJ.com reports. In some cases, the value of those parts can be greater than the whole.
For example, in 2019, PREIT sold the building at its Exton Square Mall that is leased to Whole Foods for $22.1 million. The grocer has a 20-year lease on the standalone building. PREIT also sold in 2018 four acres adjacent to the Exton property to Hanover Co., which is developing a multifamily project with 342 apartments.
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Triple-net leases involving topnotch credit tenants, such as Wegmans and Whole Foods, are considered desirable investments. The market for these deals remains strong, especially since they don’t trade with much frequency. There are several reasons investors find these properties attractive. The leases are typically long-term, rents are stable with steady escalations, and the options to extend a lease generally make it a safe investment particularly in an uncertain economy. There’s also money available to chase and finance these transactions.
Wegmans Food Markets Inc. started its lease on the 128,000-square-foot space at 500 Montgomery Mall North in November 2013. The lease expires in November 2033 and there are five 10-year options to extend the lease.
PBJ.com reports on a past sale of a Wegmans location in Montgomery County as an example of previous value of such a property.
Keep up with all your business news at the Philadelphia Business Journal.
