Full-Cycle Value Creation Drives a Sub-6% CAP Industrial Sale
Sourcing, an Expansion Strategy & a Disciplined Disposition Combine to Deliver Top-of-Market Pricing for a Repeat Developer Client
Sands Investment Group successfully facilitated the sale of a newly expanded industrial asset leased to Hajoca Corporation in Kissimmee, Florida. SIG’s involvement throughout the entire investment lifecycle of the asset made this transaction unique
The relationship began in 2022 when SIG identified and sourced the acquisition opportunity for the developer client. At the time, Hajoca occupied the property on a month-to-month lease and had outgrown the facility. The existing ownership lacked both the desire and ability to expand the property to meet the tenant’s growing operational needs.
Recognizing the opportunity, SIG connected one of our existing developer clients to the asset and helped execute a strategy centered on expansion, tenant retention, and long-term value creation. Over the next three years, the developer doubled Hajoca’s footprint at the site, secured a new long-term lease, and positioned the property for a profitable exit.
When it came time to sell, the developer again turned to SIG to execute the disposition strategy. Leveraging its national platform, investor relationships, and deep understanding of the asset’s story, SIG secured premium pricing and delivered a successful outcome for both buyer and seller.
Client Overview
The goal for this deal was straightforward: buy on the front end, build value through expansion, and sell at a profit. The transaction was distinctive as the client’s first asset leased to Hajoca, making a successful disposition an important milestone in validating the firm’s broader strategy.
The Challenge: Achieving Premium Pricing in a Challenging Capital Markets Environment
Bringing the asset to market in late 2025 and early 2026 meant navigating a difficult capital markets environment, where several factors worked against the seller’s return targets:
- Elevated construction and debt costs meant the seller needed to achieve a compressed cap rate for the disposition to make sense and to hit targeted return metrics.
- High interest rates pushed buyers toward higher cap rates and lower pricing, directly at odds with the seller’s objectives.
- Achieving sub-6% cap pricing in this climate was a tall order, and the central test of the transaction.
- As the developers first deal with Hajoca, the sale carried proof-of-concept weight for the client’s value-added approach.
In many cases, these market conditions create downward pricing pressure. For this transaction to be successful, SIG needed to identify investors willing to prioritize stability, credit quality, and long-term income over higher initial yields.
The objective was clear: secure a buyer willing to recognize the value of the newly executed long-term lease and the property’s strong underlying fundamentals while maintaining pricing that allowed the seller to complete its business plan.
The Strategy/Our Approach:
1. Leveraging a Full-Cycle Understanding of the Asset
Unlike a traditional disposition assignment, SIG was involved from the beginning, having sourced the original acquisition and helped shape the expansion strategy. That history gave the team a level of insight that most brokers never have on a sale. SIG knew how the property had evolved, understood the tenant’s operational needs, and could speak first-hand to the value that the expansion created. When buyers had questions, the team answered with real context rather than assumptions, and used that same understanding to build a clear, credible investment thesis around the asset.
2. Selling the Deal Story
Beyond the numbers, SIG anchored the marketing to the deal story. When the developer acquired the asset, Hajoca was occupying the property on a month-to-month basis because the facility no longer met its operational needs. Rather than lose the tenant, our client invested in the property, expanded the facility, and created a long-term solution that allowed Hajoca to continue growing at the location.
This demonstrated the tenant’s commitment to the site while providing buyers with confidence in the property’s long-term viability. By highlighting this narrative, SIG helped investors understand not only the current cash flow but also why the tenant had chosen to commit to the property long term.
3. Targeting the Right Buyer Profile
Recognizing that the ideal buyer profile would differ from traditional value-add investors, SIG focused its marketing efforts on 1031 exchange buyers seeking wealth preservation and long-term stability.
Key investment attributes included:
- Long-Term Lease Structure
- National Credit Tenant
- Strong Annual Rent Increases
- Strategic Orlando-Area Location
- Mission-Critical Occupancy for the Tenant
Leveraging SIG’s national platform alongside the team’s internal database, SIG connected with a known buyer completing a 1031 exchange out of California, whose criteria aligned precisely with the offering.
4. Maintaining Momentum Through Due Diligence
SIG sourced a qualified buyer quickly and kept the process moving with responsive, hands-on management. Questions that surfaced during due diligence were answered and resolved promptly, keeping the transaction on track for a smooth, seamless close.
Key Challenge: Securing a Sub-6% Cap Rate in 2026
One of the most significant accomplishments of the transaction was achieving a sale at a sub-6% capitalization rate despite prevailing market headwinds. With interest rates remaining elevated and debt costs significantly higher than recent norms, many investors were demanding higher yields and lower purchase prices.
Rather than competing on yield, SIG positioned the asset on the strength of its fundamentals. The newly executed long-term lease, the credit quality of a national tenant, and the demonstrated commitment Hajoca had made to the site gave buyers confidence in the durability of the income stream. By targeting 1031 exchange investors who valued that stability over a higher initial return, and by running a focused, competitive process, SIG generated enough demand to drive pricing well beyond what the broader market was producing. The result was a sub-6% cap rate that allowed the seller to hit its targeted return.
The Results: Strategic Execution Drives a Successful Closing
RESULTS SNAPSHOT
- $4.7 Million Sale Price
- Sub-6% Cap Rate – a standout outcome in the 2026 market
- 129-Day Disposition
- Full Deal Cycle: 3 Years, 29 Days (acquired 12/31/2022 — exited 1/29/2026)
- National Credit Tenant (Hajoca Corporation) on a New Long-Term Lease
- Tenant Footprint Doubled Through Value-Add Expansion
- 1031 Exchange Buyer Secured via SIG’s National Platform & Internal Database
The Power of Full-Cycle Execution
For the team, this transaction represented more than a strong closing price. It was a clear demonstration of SIG adding genuine value to a client’s business, sourcing the opportunity on the front end, coaching the value-add play, and executing the exit when the time was right. The result was a win-win: the seller hit a price that satisfied its targeted return and completed its business plan, while the buyer secured a long-term, cash-flowing asset that checked every box for its 1031 exchange.
Key Takeaways for Developers & Value-Add Investors
This transaction reinforces key lessons for developers and value-add investors. First, the most compelling opportunities are often created, not found, by identifying a tenant’s unmet needs and aligning the right capital to meet them. Also: a strong deal story, anchored in real estate fundamentals and tenant commitment, can drive pricing as much as the numbers themselves. And finally, in a high-rate market, matching a stable, credit-backed asset to the right 1031 exchange buyer is often the key to achieving a compressed cap rate.
Above all, the deal highlights the value of a brokerage partner who can be involved across the entire lifecycle. For developers, investors, and owners seeking to create value rather than simply collect income, this deal serves as a compelling example of what can be achieved through proactive asset management, tenant-focused solutions, and disciplined execution.
Planning your next industrial investment? Connect with our Industrial team to explore acquisition, repositioning, and disposition strategies.
IMPORTANT INFORMATION: Sands Investment Group and its affiliates do not practice law, and do not give legal, tax, or accounting advice. All clients are advised to consult their tax, legal, and accounting advisors before engaging in any transaction.
