Taco Bell Port Orchard

Property Overview

• Address: 3548 SE Mile Hill Dr., Port Orchard, WA 98366
• Building Size: 2,752 SF on a 0.87-acre parcel
• Year Built: 1997
• Lease Type: Absolute Net Lease
• Occupancy at Sale: 100%
• Sale Price: $2,000,000 ($727/SF)

Challenge

The seller needed to find a qualified buyer for a single-tenant Taco Bell in Port Orchard, Washington, while the buyer required a suitable replacement property to complete a 1031 exchange. The assignment called for matching a passive, long-term net-leased asset to an exchange buyer within the constraints of 1031 timing requirements.

Action

Our team brought the property to market as an on-market offering, positioning it around the strength of the absolute net lease structure and the remaining lease term. Key points we emphasized to prospective buyers included:

• An absolute NNN lease with 22 years remaining on a 25-year initial term, plus two additional 5-year options, meaning the landlord carries zero management obligations or operating expense responsibilities
• A lease guaranteed by the franchisee, which operates multiple quick-serve restaurant concepts including KFC, Pizza Hut, and additional Taco Bell locations throughout the Kitsap County area
• A top-to-bottom relocation and replacement of the building completed by the franchisee in 2014, with year-over-year sales growth since 2011
• A high-traffic location on the primary arterial through Port Orchard, with strong street frontage and multiple points of ingress and egress

We identified and worked with a buyer completing a 1031 exchange, for whom the passive income structure and long remaining lease term made the asset a strong fit.

Result

• Sold for $2,000,000, or $727/SF
• Property was 100% occupied at close
• Buyer successfully utilized the asset as a 1031 exchange replacement property
• The absolute NNN lease structure provided the acquiring party with a fully passive investment with no landlord responsibilities