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NEWS RELEASE

Mid-America Closes on Net Lease for LA Fitness Building in Michigan at Record Cap Rate of 8.00%

ROYAL OAK, Mich.  (October 7, 2011) – Mid-America Real Estate Corporation’s Net Lease Investment Group recently announced the sale of a 45,000 square-foot freestanding LA Fitness building in Royal Oak, Mich., a suburb of Detroit. The rare 19-year absolute triple-net lease, which sold for $12.4 million to a private family trust based in Southern California, sold more aggressively than any LA Fitness we have seen trade in three years at a cap rate of 8.00%, says Mid-America broker Tom Fritz, whose team has sold seven LA Fitness properties since 2008.

“The LA Fitness market was trading at cap rates above 9.00% as of summer 2011,” he says. “We recently sold another LA Fitness in Cincinnati, Ohio at an 8.50% cap rate in August.” The Royal Oak sale demanded even more of a premium, he says, due to the absolute triple net nature of the lease and longer term remaining. Rent commenced September, 2010 and extends through 2030, with three five-year renewal options and rent increases every five years based on the lesser of the percentage increase in CPI over the preceding five-year period, or 10%.

The August sale of the double-net leased LA Fitness building in Cincinnati was to an East Coast investment fund. According to Mr. Fritz, the building was constructed in 2008 with a primary lease term of 15 years and rent escalations every five years. “In the peak of the market in late 2007 and early 2008, the standard 15-year double-net LA Fitness lease was selling at cap rates ranging between 7.50% and 8.00%, Mr. Fritz says. “Since then, the market shifted into the 9.00% to 10.00% cap rate range and has remained there for nearly three years. This new cap rate compression optimism for the investment sale market in 2012.”

Tom Fritz, Bill Wright, Mark Goldberg and Ben Wineman of Mid-America Real Estate Corp., in cooperation with Richard Kerwin of Mid-America Real Estate Michigan were the exclusive representatives of the seller, a Michigan based developer, on the Royal Oak sale. The building, built in 2010, is located on 3.3 acres at 25352 Woodward Avenue, and is bordered by Interstate 696 to the south and the entrance to the Detroit Zoo across Woodward Avenue to the southwest.

Mid-America Real Estate Corporation is a member of Mid-America Real Estate Group, a ChainLinks affiliate. Mid-America Real Estate Group is a full-service retail real estate organization that has become the Midwest’s leader in retail investment sales. For more information, call (630) 954-7300 or visit www.midamericagrp.com.

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