$35M real estate deal involving Wegmans' site in KoP completed

Realen Properties has sold the lease it has with Wegmans in King of Prussia, Pa., along with the 12 acres the grocery store sits upon for $35.75 million.

The transaction involved CBRE Inc.’s institutional advisory division in Boston and it couldn’t be determined if the real estate firm bought it on behalf of a client or some other affiliated entity. A representative from Realen Properties, based in Berwyn, Pa., couldn’t be reached for comment. Realen is the owner and master developer of the Village at Valley Forge, which is a planned mixed-use community along North Gulph Road.

Wegmans signed an initial 25-year lease on a 140,000-square-foot store that has multiple options to be extended. The grocer opened in May 2012.

Triple-net leases involving marquis credit tenants, such as Wegmans, are highly desirable investments. The market for these deals has heated up, especially since they aren’t easy to come by.

There are multiple reasons investors find them attractive. The length of the leases are typically long-term, rents are stable with steady escalations and the options to extend the lease make it a safe investment particularly in an uncertain economy. There’s also money available to finance these transactions. These types of deals account for about $25 billion of the real estate investment market, according to a 2011 study done by the CCIM Institute. “Structured like a bond and usually backed by investment-grade tenants, net leases have proven to be among commercial real estate’s most resilient and popular sectors,” the report said.

This isn’t the first piece of ground that Realen has sold at its 130-acre Village at Valley Forge. Children’s Hospital of Philadelphia bought roughly 10 acres for around $12 million and is constructing a 115,000-square-foot building that can be expanded up to a total of 195,000 square feet. JBG Rosenfeld Retail of Chevy Chase, Md., has 20 acres under agreement next to the Wegmans and has plans to construct a life-style center on that land.

Source: Philadelphia Business Journal