RealSource Group, a national commercial real estate brokerage company focused on tenant representation and investment sales, announced the sale-leaseback of a single-tenant net-lease investment occupied by LA Fitness, located in the Memphis metro area. The 6.00% cap rate was the lowest reported cap rate for an LA Fitness property since 2019, per CoStar.
RealSource Group’s Senior Vice President Ted Slaughter and Associate Jonathan Schiffer, in association with Scott Reid of ParaSell, Inc., represented the seller, Fitness International of Irvine, California. The buyer, a private investor, represented themselves.
“The buyer was interested in this property as a long-term hold. Coupled with the underlying intrinsic value of the real estate, the buyer understood Fitness International’s best-in-class credit that continues to hold its position as the #1 health club operator in North America,” said Slaughter. “Additionally, being a private company that operates over 730 full-service health and fitness clubs, all of which are corporate-backed leases and corporately operated, Fitness International, the parent company of LA Fitness, truly stands in a league of its own. The security of this single-tenant net lease, a 15-year term, rental increases every five years, and a property with strong underlying fundamentals is what ultimately proved the value of this deal.”
Slaughter continues, “At RealSource, we manage the national tenant-rep account for Fitness International and have done so for over 24 years. Instead of focusing our attention solely on the cap rate, our intimate understanding of the tenant, the market, and the trade area helped elicit multiple written offers, all at market-leading cap rates, despite what some would characterize as a challenging financial environment. Recognizing how to communicate the true value of this asset combined with the strength of Fitness International, both today and in the future, led to a successful close for all parties.”
The 34,000-square-foot prototype LA Fitness building, built in 2019, is located at 1088 West Poplar Avenue in Collierville, Tennessee, a high-income suburb of Memphis. The property is situated in the heart of a major commercial artery, with immediate retailers including Target, Kroger, Walmart Supercenter, Lowe’s, and Home Depot. Chipotle Mexican Grill and Chick-fil-A are located on outparcels to LA Fitness.
Nearby is the one-million-square-foot FedEx World Tech Center and a 900,000-square-foot Carrier facility, both being located approximately one mile from the property.
“Tennessee, like Texas and Florida, does not have a state income tax, making it an attractive location for investors,” Schiffer highlighted.
According to Schiffer, “A 6.00% cap rate reflects the strong financial standing of Fitness International, which has clearly distinguished itself from its competitors across the industry.”
About Fitness International, LLC
Fitness International, LLC is one of the fastest-growing health club chains in the U.S., with over 700 locations across 27 U.S. states and Canada. Operating the brand names Club Studio, LA Fitness, Esporta Fitness, and City Sports Club, the company’s mission is to help as many people as possible achieve the benefits of a healthy lifestyle by creating a nationwide network of health clubs, offering its members the widest range of amenities and the friendliest service at an affordable price. To learn more about Fitness International’s growth, visit lafitness.com, esportafitness.com, citysportsfitness.com and clubstudiofitness.com. Follow Fitness International on Facebook, Instagram or by downloading its mobile apps.
About RealSource Group
RealSource Group was founded by John Kalamaras in 1991 as a national commercial real estate brokerage company specializing in tenant representation, investment sales and sale-leaseback transactions. With the combination of RealSource’s leasing and sales experience, vast broker network, technology, unique processes, and national reach, RealSource delivers consistency, high-quality production, quality service and measurable deal-making results for its clients on a nationwide platform. Transacting over 1,000 commercial real estate deals nationwide, RealSource has perfected its platform through proven execution over the last 33 years. For more information, visit: realsource.com.
