RealSource Group completed the sale of a single-tenant property occupied by Pilot Flying J Travel Center in Jurupa Valley. At $14 million, the sale reportedly set new records nationwide for both the highest sales price and price per square for a Pilot ground lease. Additionally, the closing cap rate of 4.90% establishes an all-time low for a Pilot ground lease outside Texas.

Austin Blodgett, RealSource SVP of investment sales, and associate Jonathan Schiffer represented the seller, Greens Group, based in Irvine. Blodgett and Schiffer also represented the buyer, a private investor also located in Irvine.

“This sale represents a notable milestone, setting nationwide benchmarks for a Pilot ground lease,” said Blodgett. “The acquisition also marked the buyer’s first net-lease purchase. The buyer was particularly drawn to the property’s underlying real estate value and the unique security offered by the Pilot brand, now wholly owned by Berkshire Hathaway  under the leadership of Warren Buffett, further bolstering the buyer’s confidence in the investment.”

The tenant’s absolute triple-net ground lease relieves the buyer of landlord responsibilities. “Pilot Flying J has more than 14 years remaining on the initial lease term with four five-year options and 10% rental increases every five years,” Blodgett said.

December student housing preleasing for the 2024-2025 academic year set a new record at 47.3%, up 9% from a year ago, according to the latest Yardi Matrix National Student Housing Report. Asking rates also continued to climb, hitting $858 per bed in December and marking a 4.9 percent increase on a year-over-year basis.

The exceptional preleasing indicates a high renewal rate, according to Yardi Matrix, with 51 markets boasting a 50% rate in December and 10 schools already at least 75% preleased. Rent growth inched downward, falling from 6.4% earlier in the leasing cycle to 4.9% in December 2023.

“Many of the markets with the fastest preleasing are seeing the strongest rent growth as operators take advantage of the surge in demand,” according to the report. “Twenty-seven schools with over 10% rent growth in December are, on average, five percent ahead of preleasing last year.”

Conversely, student housing investment is in line with current trends across the real estate industry, as high interest rates continue to impact sales. According to preliminary data, just 73 student housing properties changed hands in 2023 across the Yardi 200, compared to an average of 205 properties sold in 2021 and 2022.

Pictured: James Madison University in Harrisonburg, VA, which saw the fastest year-over-year preleasing growth in the Yardi 200. Photo by Ben Schumin/Wikipedia.