Joshua Village Shopping Center is a 97,000 s.f. neighborhood shopping center located in Yucca Valley, California. Anchored by a major grocer, the center includes two fast food outparcels and in-line shop space. Joshua Village is situated on a major state highway linking several desert communities to Interstate 10 in the Inland Empire region.
Presidio Property Trust acquired Joshua Village In an off-market transaction in September, 2011 for $6.6 million, which represented a capitalization rate of nearly 10%. The center was 93% leased. This acquisition excluded an in-line drug store which was owned by another investor. We were subsequently able to acquire the drug store property off-market in May, 2012 for approximately $1.1 million. At the time of acquisition, the drug store had vacated but was still obligated to pay rent for several more years.
In September 2012, Presidio Property Trust entered into a letter of intent with a major national retailer to lease the drug store building at a lease rate 3% higher than drug store’s rent for a 10 year term. This benefited the property by adding a long-term credit tenant draw replacing a weaker short-term tenant which had vacated the property. We then negotiated a buyout agreement with the drug store resulting in a significant early termination penalty paid to Presidio Property Trust.
In 2015, one of the fast food outparcel tenants vacated upon lease expiration. Within 7 months, Presidio Property Trust leased this property to another national fast food operator under a new long-term lease at a rent 23% higher than the previous tenant’s rent. In 2016, recognizing the aggressive valuations of NNN leased investments, we sold this outparcel to an investor at a 5% capitalization rate.
Also in 2015, Presidio sold the other fast food outparcel for $1.5 million, which represented an approximately 5.25% cap rate.
In 2018, the remainder of the center was sold to an investor for $7.8 million, resulting in total sale proceeds of nearly $10.5 million.