Wegman’s Parcel at Montgomery Mall Sold to California Investor for $22.6M, Store Lease Expires 2033

Nine months after it was announced that the Wegman’s parcel at Montgomery Mall was going up for sale, the triple-net-lease grocery store was sold to a California real estate investor for $22.6 million, according to Ryan Sharrow and Natalie Kostelni of the Philadelphia Business Journal.

ExchangeRight, of Pasadenia, CA, just added the 128,000-square-foot grocery store to its vast net-leased portfolio, purchased from Kohan Retail Investment Group of Great Neck, NY, according to the article. Kohan purchased Montgomery Mall in a foreclosure sale for $55 million last November, under the entity Montgomery Mall Realty Holdings.

According to the Philadelphia Business Journal, triple-net leases, like Wegman’s, are desirable investments: They are long-term, they are stable, and they offer lease extension options in an uncertain economy.

Wegmans started its lease in 2013 and it expires in 2033, per the article. There are five 10-year options to extend the lease, according to the 2021 Philadelphia Business Journal article.

According to the September Philadelphia Business Journal story, selling off individual parcels is not uncommon for real estate investors.

A net-leased property is one where the tenant pays some of the property taxes, maintenance costs and insurance, per the report. ExchangeRight’s website states that it deals in long-term leases and shopping centers with “investment-grade or equivalent-credit” grocery stores.

The 1.1-million-square-foot Montgomery Township Montgomery Mall property, which sits on 105 acres, was appraised at $57.6 million. In 2014, it was appraised at $195 million, according to the Philadelphia Business Journal. The sale price was less than half of the $118.78 million judgement rendered against Mall at Montgomery, L.P. at the time of foreclosure in June.