I have an associate who co-owns (50% undivided interest) a 4 tenant, Class B Retail property in a middle (to working) class Long Island residential area which generates $16,000 a month total NOI with NNN leases.
The leases all have 5-10 years left to run with a good probability of renewal across the board. No inordinate cap ex or tax issues are anticipated.
The area is surrounded by multifamily buildings and has decent fundamentals for retail.
The tenants are a: dry cleaner, sandwich shop, grocery store and a generic ice cream parlor.
He owns the property with his brother who also manages the property for 8% of gross rents since my associate lives in California and is not a real estate guy. Friend's piece of the NOI is $8,000. He is retired living with his non-working wife in Newport Beach and lives fully on the monthly $8,000 of NOI.
There is no debt to service because they paid that off +/- 20 years ago so I am told.
In any event, the brothers have had a falling out, and now the managing brother wants to buy my friend out.
Given the above, how would you value my friend's retail piece?
Note/subjective factors: He values cash flow over principal (ie if he sells, he would need a competing investment to kick off $8,000 each month / $96,000 annually to support himself, and his wife. He doesn't have any kids).
The attached photo: is not of the actual property, but representative of the quality. The actual site has 10-15 parking spaces on the property lot.