Colliers Team Races 1031 Tax Deadline in $15.225 Million Sale of Walmart Neighborhood Market
Brokers Close Deal with Record Cap Rate
A team of seasoned senior retail brokers from Colliers International, working from offices on both coasts and staring down a double-barreled IRS tax deadline for 1031 property exchanges, successfully and aggressively negotiated the sale of a Walmart Neighborhood Market site in Savannah, Georgia for $15.225 million with a record capitalization rate, officials have reported.
Despite the looming tax exchange deadline, the Colliers team led by SVP Eric Carlton, who is based in the brokerage firm’s Irvine office in Southern California, remained steadfast despite their foreshortened negotiating window, convincing the New York City investor-buyer to agree to one of the lowest capitalization rates ever recorded in the sale of a Walmart Neighborhood Market site. As a result, the final purchase price was near their client’s original asking value.
“By agreeing to this record cap rate, the private investment firm that acquired the property, which was anxious to expand its investment portfolio with the iconic Walmart brand, agreed to the cap rate that we offered and that brought the value of the transaction very close to our client’s original asking price,” said Carlton. “We performed where many of our competitors could not and that was a positive step in securing more business with the No.1 company on the Fortune 500 list.”
Hutton Development of Chattanooga, the largest of only a handful of “preferred” developers in the nation that have been selected by Walmart to build its rapidly expanding chain of groceries-only stores, was the builder and seller of this particular 41,117-square-foot store located at 10530 Abercorn Street in Savannah.
Carlton and EVP Jereme Snyder, also based in Irvine, represented Hutton in the transaction that was complicated by the buyer’s 1031 tax exchange status and looming deadline to qualify for the exchange. Colliers’ Ashley Smith of the brokerage firm’s Savannah operations also was a part of the marketing team.
“What this demonstrated to Walmart, Hutton and to the New York-based investor – and should show to anyone familiar with the details of this transaction -- is that when we talk about our national capabilities, we mean it,” said Carlton. “This was a down-to-the-wire transaction that showcased in real time our national exposure, our expansive database, and our experience in the art of negotiating. This was a successful, coast-to-coast effort and we negotiated a transaction where both sides left the table pleased with our efforts.”
What surprised Carlton and other Colliers officials is that the selling package included a “parent guarantee” clause on the lease, which is rare in most Walmart transactions. For the investor, noted Carlton, this was one of the most appealing parts of the transaction. The existing Walmart lease includes an initial term of 15 years, plus 17 five-year options to extend.
“It’s almost unheard of in a Walmart-backed deal,” said Carlton. “This is a brand new building that Walmart expects to occupy for something like 40 years with all the extensions and we were able to persuade the investor to agree to an almost full-price offer. But any smart investor would do the same thing in order to have the company the world’s best-known retailer as part of its portfolio.”