BJ's Land a Buyout Lure

The Natick, Mass.-based company's stores are spread across the Eastern seaboard, with a little more than half in New York, Florida, Massachusetts and New Jersey -- all desirable locations from a retail and real estate perspective

Strong buyer demand for such properties has driven down cap rates, or initial rates of return, boosting real estate values to all-time-high levels. The demand is coming from real estate investment trusts, 1031 tax-exchange buyers, and high-net-worth individuals looking for tax shelters, industry experts says.

CB Richard Ellis, a leading commercial real estate firm, is currently marketing for sale a rather typical BJ's Wholesale Club in Cutler Bay, Fla., just south of Miami. The seller is a private real estate investment trust. The cap rate is 6.75%, with initial rents of $8.40 per square foot per year. The 108,000 square foot property is being sold for $13.4 million.

Jeffrey Thomas, the CB Richard Ellis broker who is marketing this listing, believes a 7% cap rate is a conservative number to apply to BJ's national portfolio of 48 owned stores. In fact, the true cap rate could be closer to 6.5%, he says. For the 11 sites where BJ's has a ground lease but owns the building, a higher cap rate of 8.25% to 8.5% should be used, he says.