Nov 2, 2022

Blue West Capital Arranges Sale of Freddy’s Frozen Custard & Steakburgers Sale Leaseback Property in Denver MSA

CASTLE ROCK, CO - [November 2, 2022] – Blue West Capital has completed the sale of a single tenant Freddy’s Frozen Custard & Steakburgers sale leaseback property located at 1346 New Beale Street in Castle Rock, CO for $4,023,000. The property sold for a 4.35% cap rate, the 4th lowest cap rate ever recorded nationally for a Freddy’s property.

Blue West Capital has now sold the 1st, 2nd, 3rd, and 4th lowest cap rates ever recorded nationally for Freddy’s Frozen Custard & Steakburgers properties according to CoStar. On August 16, 2022, Blue West Capital sold two Freddy’s properties located at 11140 S Twenty Mile Road in Parker, CO and 2300 Coalton Road in Broomfield, CO for 4.30% cap rates. One week later, Blue West Capital sold a Freddy’s on August 23, 2022 located at 18424 Cottonwood Drive in Parker, CO for a 4.25% cap rate.

Zach Wright and Brandon Wright, of Blue West Capital, exclusively represented the seller in the Castle Rock transaction. The seller was a Freddy’s franchisee based in Denver and the Midwest. The purchaser was a private family office based in Southern California in a 1031 exchange.

The Freddy’s Frozen Custard & Steakburgers property features a new fifteen-year triple net lease with no landlord responsibilities. The lease includes 10% rental increases every five years. The lease is guaranteed by an entity encompassing all sixteen Freddy’s locations in the Denver MSA. Freddy’s has approximately 450 locations and was the eighth Fastest Growing Chain in the U.S., according to Technomic.

Castle Rock is one of the fastest growing and most affluent suburbs of Denver. The property is strategically positioned in the Promenade at Castle Rock as an outparcel to a Lowe’s. The property is directly across the street from the Outlets at Castle Rock. This is a regional retail destination attracting shoppers from throughout the Denver MSA and Colorado Springs MSA. The surrounding area is affluent with average annual household incomes of $150,000 within five miles.

“STNL demand is largely a byproduct of other asset classes transacting at strong prices with high volumes and velocity. Demand for STNL properties nationally has begun to pull back as the 1031 exchange investor pool dries up. However, we continue to see strong demand for properties located in the Colorado Front Range as evidenced by this sale. The Blue West Capital platform continues to assist owners of these properties sell for aggressive prices and terms,” stated Zach Wright, Director & Partner.

“QSR properties with long-term leases and strong real estate fundamentals are amongst the most sought after net lease investments,” added Brandon Wright, Associate.  

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