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.

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/