NNN Lease Market News
How do I calculate the possible market value of a zero cash flow property?
Values for zero cash flow properties are usually expressed as a percentage over the debt. That is to say, some percentage in excess of the debt. As an example, a brand new CVS zero with 25 years left on the lease/loan that fully amortizes would price in today's market at probably between 9% and 10% over the debt, such that if the loan balance were say $10Mil, then the total value be about $11Mil, meaning you could buy it with approx. $1Mil in equity. Further, the more seasoned that zeros become (older) the more valuable they tend to get, as you are closer to the day that you own it free and clear.
Another way to approach the problem would be to value the store as you would any other NNN property by applying a cap rate to the NOI. However, by applying a cap rate to the NOI, you would probably need to add at least 150 basis points premium to the cap rate. This helps account for the constraints of the zero deal (i.e. inability to refinance etc.). Said differently, If you have a deal that would otherwise trade at a 7.00%, as a zero it would probably value closer to an 8.5%.
http://www.calkain.com/
Showing posts with label NOI. Show all posts
Showing posts with label NOI. Show all posts
Wednesday, June 1, 2011
Friday, May 20, 2011
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
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
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:
Associate
(703) 787-4714
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