Gramercy Property Trust Inc, New York, has sold one of the Life Time Fitness, Chanhassen, Minnesota, buildings it acquired in June, and more sales may be coming.
Gramercy, which purchased 10 buildings from Life Time Fitness for approximately $300.5 million in a 20-year sale leaseback transaction, sold the building in Summerlin, Nevada, on Sept. 16 for approximately $51 million.
The sale is part of Gramercy's plan to reduce its tenant exposure to Life Time Fitness to less than five percent of its aggregate net operating income by June 2016. Gramercy said it may sell up to four of the acquired buildings by the end of 2015 as part of the plan, which was announced in June.
Research by Club Industry showed the Summerlin location was Gramercy's first sale of its acquired Life Time Fitness buildings. A request from Club Industry to Gramercy to confirm this research was not returned. The 10-building acquisition was part of $900 million in leaseback transactions involving 29 buildings by Life Time Fitness, which it said would fund the sale of Life Time, related transactions and related fees it incurred earlier this year when Life Time returned to a privately held company.
Gramercy purchased the Summerlin location for $45.5 million; the Colorado Springs, Colorado, property for $36 million; the Centennial, Colorado, property for $32 million; the Reston, Virginia, property for $33 million; the Canton, Michigan property for $26 million; the Deerfield Township, Ohio, property for $24.8 million; the Eden Prairie, Minnesota, property $23.2 million; the Collierville, Tennessee, property for $27.5 million; the Bixby, Oklahoma, property for $25.5 million and the Mansfield, Texas, property for $27 million, according to Gramercy's publicly disclosed second quarter financials.
The deal for the 145,000-square-foot, single-tenant retail building in Summerlin was arranged by Matthew Mousavi and Patrick Luther of Faris Lee Investments, Irvine, California. The buyer was undisclosed. The $51 million was the highest price paid for a single-tenant retail asset nationally this year, according to an announcement from Faris Lee Investments.
Life Time Fitness recently signed a 20-year absolute NNN corporate-guaranteed lease with scheduled rental increases during the term, according to the announcement from Faris Lee Investments.
“We marketed Life Time Fitness as a unique, generational asset in a prime, irreplaceable location within Summerlin, the highest income submarket of Las Vegas and a highly affluent master-planned community,” Mousavi said in a statement. “We also highlighted the physical attributes of the building itself as well as the tenant’s extremely high membership numbers. The lease itself was well-suited for a wide range of investors, and we received interest from institutional, private and offshore buyers.”
Life Time Fitness declined to disclose additional details with regard to this transaction, citing its policies as a privately held company. The Summerlin club opened in 2011, and Life Time Fitness Vice President of Corporate Communications Jason Thunstrom said it has "performed well" in accordance with company expectations.
The Summerlin club is one of two Life Time Fitness locations in the Las Vegas market. The other location is in Henderson. Life Time Fitness has not announced plans for a third location in the market, Thunstrom said.
"That said, we continue to seek suitable locations for new clubs in both existing and new markets, so I wouldn’t rule out future expansion there (Las Vegas) or elsewhere," Thunstrom said.
The four-story building in Summerlin is located on six acres on West Charleston Boulevard. It is surrounded by two million square feet of retail property between three major shopping centers and more than 500,000 square feet of office space.
Amenities at the Life Time Fitness club include fitness studios, a yoga studio, indoor and outdoor pools, spa and medispa, a café, a cycling theater, a child-care center, basketball courts, a rock wall, squash courts, a Pilates studio, personal training services, and locker rooms featuring cherrywood, limestone and granite.