NNN Dollar General Sold

NNN Lease Market News

Dollar General Net Lease Sells for $1.23MM in Petersburg, VA

Calkain Companies recently sold a Dollar General (NYSE: DG) NNN net lease investment property located in Petersburg, VA. The transaction closed within the past 30 days and illustrated the compressing cap rates within the net lease segment of the market. The buyer was a privately held, fully integrated real estate investment company. The seller was a regional real estate developer. As a preferred developer for Dollar General, the same seller has engaged Calkain to sell another store in Halifax, VA. These Dollar General properties have been developed as part of Dollar General’s build-to-suit program. The stores have brand new 15-year NNN net leases, which provide passive income for the new owner.

Calkain’s Andrew Fallon, Assistant Vice President, facilitated the transaction by providing exclusive representation to the seller. More sales of Dollar General stores have been transacting since S&Praised the company’s credit rating to investment grade BBB- in April 2012. The Petersburg store was highly sought after given its proximity and access to the I-95 corridor, the surrounding demographics, and the favorable lease structure. Fallon commented, “As Dollar General continues to roll out new stores in new markets, the investor demand continues to increase for superior market locations.” The combination of tenant credit and triple net lease terms provide a passive, bond-like fixed income investment, “The leases with Dollar General’s guaranty provide a strong income stream for the buyer, who will have limited to no management responsibilities.” The buyer financed the purchase using a regional bank.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net leased transactions. While licensed to conduct business in many states, nationally, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast, Northeast and a new office opening in the Midwest. Additional information about the firm and listings may be found at www.calkain.com.

Dollar General Up By One Notch to BBB-minus

NNN Lease Market News

  

Standard & Poor's upgraded Dollar General rating by one notch to BBB-minus.

The action was hardly a shocker - Dollar General was on the agency's latest list of rising stars, fallen angels published on April 9, one of 23 global companies that were poised for a return to high grade. S&P had placed the company on CreditWatch with positive implications back in March.

But the upgrade is also the result of the company's robust sales, expectations for future growth as well as its commanding market position as a discount retailer.

 "Dollar General's revolutionary retail-innovations, ample square footage growth potential and strong management execution continue to deliver out-sized market share gains," Bank ofAmerica Merrill Lynch analysts said in a recent note.

The analysts do concede that Dollar General typically sells traditional convenience and some staple foods, and not usually fresh items.

The expansion in potentially underserved markets as well as its strategy of keeping its prices in line with cost increases will help position it in the longer run, Barclays said in a note.

And while longer term debt reduction might be deferred in lieu of share buybacks, Barclays says the company's solid free cash flow of around $536mln in 2011, and estimates of $643mln in 2012 and $949mln in 2014, will allow for a reduction of its approximately $2.5bln in debt and buttress earnings per share growth.

 http://www.reuters.com

Two Triple Net Lease (NNN) Dollar General Sold

NNN Lease Market News

Two net lease investment properties occupied by Dollar General (NYSE: DG) in the Virginia towns of Madison and Ferrum have sold for $2.54 million.

The two properties were recently developed as part of Dollar General's built-to-suit program, and the stores have brand new 15-year triple net leases.

Calkain's Andrew Fallon, Associate, facilitated the transaction, providing exclusive representation to the Seller, who developed the assets. The purchaser was a regional real estate development and management company based in the Northeast.

"The dollar store companies, including Dollar General, are relocating to free-standing stores in existing markets and opening new stores in new markets," said Fallon.

Investors are now looking to single tenant net lease properties to produce steady profits as the commercial real estate market attempts a recovery from the recession. Net lease properties trend toward higher-quality assets and creditworthy renters who often agree to graduated increases in rent over long periods of time.

 
Some of these are even so-called triple net lease (NNN) properties wherein the tenant also pays for maintenance, insurance and taxes on the property. Opportunities for these buys are increasing and investors are increasing their holdings as they begin to realize the benefits of these properties as safe long-term real estate investments.

Dollar General Corporation is the nation's largest small-box discount retailer. We make shopping for everyday needs simpler and hassle-free by offering a carefully edited assortment of the most popular brands at low everyday prices in small, convenient locations. Dollar General ranks among the largest retailers of top-quality brands made by America's most-trusted manufacturers, such as Procter & Gamble, Kimberly Clark, Unilever, Kellogg's, General Mills and Nabisco.

www.calkain.com

NNN Dollar General

NNN Lease Market News

Dollar general for sale!

Triple Net Lease Information on Dollar General

Ferrum, VA       Madison, VA             Richmond, VA  

$1,319,225           $1,294,975                    $1,361,239

HIGHLIGHTS

•Brand new, 15-year NNN lease

•3% rent increase in lease-year 11 & 10% increases every 5 years during the option periods

•Guaranty from Dollar General Corp., the largest discount retailer in the US

•Strong tenant with stable & positive outlook; improving credit ratings

•Strategic trade area locations with supporting demos & target market characteristics

Dollar General Corporation

Traded as NYSE: DG

Industry Discount, Variety store

Founded 1939

Headquarters Goodlettsville, Tennessee, U.S.

Number of locations 9200+[1]

Products Low cost items

Revenue $11.796 billion (2010)

Operating income $953.258 million (2010)

Net income $339.442 million (2010)

Employees 79,800

Website DG.com or / Dollar General.com

References: In June 2007, Dollar General was acquired by a group of private investors.

Dollar General Stores are typically in small shopping plazas or strip malls in local neighborhoods. The company acquired the 280 stores of the P.N. Hirsh Division of Interco, Inc. (now Furniture Brands International, Inc.) in 1983 and in 1985 added 206 stores and a warehouse from Eagle Family Discount Stores, also from Interco, Inc. In recent years, the chain has started constructing more stand-alone stores, typically in areas not served by another general-merchandise retailer. In some cases, stores are within a few city blocks of each other.

Since the turn of the century, Dollar General has experimented with stores that carry a greater selection of grocery items. These stores (similar to the Wal-Mart Supercenter, but much smaller) operate under the name "Dollar General Market".

Recently, Dollar General began selling produce, meat, and baked goods in new stores called "Dollar General Market" in former supermarket locations, even though this idea is similar to the Dollar General Market.

VIRGINIA LOCATIONS

 For More information Contact:

Andrew Fallon

Associate

(703) 787-4714

 

NNN Dollar General is a Great Example For Investors

NNN Lease Market News

Dollar General is a great example. Dollar General has recently moved to a much larger type facility. The leases they wrote were 10 years with 3 five year options. In many markets they decided not to exercise options, and have built much larger stores in close proximity to the original store. So the landlord is now left with an empty store, no competitor wants to lease because Dollar General is in area with a better facility, and the ballon mortgage payment is do. Further, these were set up at such low cap rates that the investor actually had negative cash flow, but theoretical equity buildup. with real estate values down and these properties hard to lease, the equity buildup is gone and so to may be the capital invested.

The point to realize is that even if everything turns out great with a NNN property, the competition is such that the investor gets a rate of return similar to a long term bond issued by the same company. The payoff would come from after the lease is up, IF the value of the property has risen with demand.

For a larger profit both cash flow and capital appreciation, the investor must lease to non credit tenants who have little market power and will pay a return reflecting a much higher cap rate. These properties can yeild double what a credit tenant NNN lease can yield. Of course the risk of default is increased also.

Family Dollar Tops Profit Estimates

NNN Lease Market News
 
Family Dollar Stores Inc., which posted a 23% rise in fiscal fourth-quarter profit Wednesday, said low-income shoppers are being joined by middle-class consumers in the discount chain's aisles.

Family Dollar said it plans to open about 300 stores during the new fiscal year, up 50% from the prior year, and close 80 to 100 locations. Family Dollar, which operates 6,785 stores, added a net 61 in the latest quarter.
The company also plans to renovate 600 to 800 stores, which JMP Securities analyst Peter Keith said would be "quite an undertaking" for a single year. The move is expected to boost sales because the new store designs likely will have additional room for food products that have helped buoy results.
Family Dollar expects the renovations to cost $100,000 to $130,000 per store, or a total of $60 million to $104 million, and will include exterior touch-ups as well as changes to the sales floor. The company said it is likely to complete 200 renovations by the holiday season. Early feedback about renovations that began in August has been "very encouraging," said Mr. Levine, the CEO. http://blogs.wsj.com/marketbeat/2011/03/30/family-dollar-up-after-solid-earnings/?mod=wsjcrmain

In 1958, a 21-year-old entrepreneur with an interest in merchandising became intrigued with the idea of operating a low-overhead, self-service retail store. Leon Levine believed he could offer his customers a variety of high-quality, good value merchandise for under $2. Because he had grown up in his family’s retail store, he understood value, quality and customer satisfaction.

In November 1959, Leon Levine opened the first Family Dollar store in Charlotte, North Carolina, and was on his way to becoming a retailing legend. Right from the start, he had a well-developed philosophy of what Family Dollar would be and how it would operate, a philosophy from which he and his management team have never strayed. The concept is a simple one, “the customers are the boss, and you need to keep them happy.”

. http://www.familydollar.com/pages/home.aspx

Dollar General in Folkston, GA Sold

Reston, VA - Calkain Companies', a national real estate investment brokerage firm, recently completed the sale of a Dollar General store located in Folkston, GA. The 9,014 SF investment property is leased to Dollar General on a long-term, double net (NN) basis. The purchaser was a private investor seeking a passive, incoming-producing asset leased to a national tenant.
Calkain's Rich Murphy brokered the transaction on the buy side and worked with Bill Weitzenkorn from Tri-Oak Commercial who represented the seller. Calkain utilized its extensive database to match its buyer up with properties that would fit their investment strategy. “Knowing the buyer's criteria, it was a matter of finding an attractive property at the right price point,” says Murphy. “This property was actually a relocation of an existing successful Dollar General. That along with a solid location and an excellent CAP rate made this a great transaction for all involved,” adds Murphy. The asset traded at an 8.9% CAP rate, illustrating that good deals exist out there for those willing to look hard enough. This Dollar General deal represents the type of stable asset that investors are focused on purchasing in the current environment.
The transaction closed within the last thirty days and is recorded in the public record.
Calkain is a full service real estate brokerage firm with a national scope focusing on single and multi tenant retail, industrial, hotel and office net-leased transactions. Calkain has offices in Reston, VA (Washington, DC), Florida, Maryland and Delaware. Additional information about the firm and its listings may be found at
http://www.calkain.com/