Cap Rates on Walgreens and CVS Properties Remained Flat

NNN Lease Market News



Cap Rates on Walgreens and CVS Net Lease Properties 

Cap rates on Walgreens and CVS properties remained flat with the quarter prior at 6.45 percent and 6.7 percent respectively, but cap rates on restaurants fell 25 basis points to 7.25 percent. Cap rates on McDonald’s restaurants in particular fell 20 basis points to 4.8 percent, and cap rates on Dollar General stores fell 15 basis points, to 8.1 percent.

In addition, cap rates on properties leased to banks compressed 35 basis points, to 5.5 percent. Still, the cap rate compression on the most popular properties was below predictions. Back in May, researchers with Marcus & Millichap Real Estate Investment Services estimated that cap rates on dollar stores and drug stores would fall 30 basis points each from the first to the second quarter of 2012, while cap rates on quick service restaurants would fall 60 basis points.

However, few of those properties are trading in the core markets. Finding a McDonald’s or a Walgreens for sale in a primary market has “gotten tougher because there is not a lot of new things coming out of the ground and partly that’s what pushed down cap rates, as well as [the fact that] interest rates have gotten so low,” says Jonathan W. Hipp, president and CEO of Calkain Cos., a Reston, Va.-based brokerage and consulting firm specializing in the net lease sector.

To compensate for lack of product in prime locations, net lease investors have been more willing to accept risk in exchange for higher yields. Some are starting to buy assets leased to A-credit tenants in second-tier markets, Hipp notes. Others are investing in franchise restaurant locations instead of corporate-owned properties because they like the sector’s healthy growth.

www.calkain.com

NNN Walgreen in Texas Close for $7.3 million

NNN Lease Market News

Net leased Walgreens sells for $7.3 million in McKinney, Texas

McKINNEY, Texas - In a quick-moving, all-cash close, a private family trust from California has paid $7.3 million for a 14,820-square-foot store, net leased until 2033 to Walgreens.

Jim Casale, principal in the San Diego office of Lee & Associates, represented the buyers. Brad and Gavin Kam of Net Lease Realty Advisors in Dallas marketed the property for the sellers, JK 720 Custer LLC. The Walgreen build-to-suit delivered in 2008 at 8996 Stacy Rd. in the 2,500-acre Craig Ranch. The Deerfield, Ill.-based pharmacy chain's long-term lease includes options.


http://dallasrealestate.citybizlist.com

NNN Lease Investors Remain Enamored With Walgreens & CVS Caremark

NNN Lease Market News

NNN Lease Investors Remain Enamored With Walgreens & CVS Caremark

Net lease investors can’t seem to get enough of the drugstore sector with sales today being driven by a desire among both lenders and buyers for low risk assets with a steady income stream.

According to a report on the second-half outlook for net lease properties from Marcus & Millichap Real Estate Investment Services, drugstore sales were up 10 percent, supporting a 3 percent rise in the median price for the sector to $334 per square foot.

http://retailtrafficmag.com/

The Largest Net Leased Retail Transaction In The Washington, DC Area In The Last Several Years

NNN Lease Market News

Walgreens & PNC Bank leases Made this Net Leased Retail Transaction More Unique in Today’s Market

Reston, VA, – Calkain Companies, a national real estate investment brokerage firm, represented both seller and buyer on a cobranded Walgreens (NYSE:WAG) and PNC Bank (NYSE:PNC) ground lease in Fairfax, VA. The transaction sold for $13,800,000 which equated to the largest net leased retail transaction in the Washington, DC area in the last several years.  The sale price represented a 5.90% capitalization rate which is indicative of the reach that Calkain Companies has to match investors with sound real estate investments.
Jeff Bogart, Tax Strategy Specialist of Calkain Companies, represented both the buyer and seller.  “Ground leases are not as prevalent as fee simple properties and as such, demand is high for Walgreens (Standard and Poors: A+) and PNC Bank (Standard and Poors: A+) quality of credit coupled with the added security of ground lease ownership. Both leases had rental increases every 5 years, which, in comparison to typical Walgreens’ leases, made this property more unique in today’s market. The intrinsic value of the real estate also helped drive the cap rate to 2007 levels as it is located in Fairfax County, Virginia - which has a top 10 national ranking for median household income, at well over $110,000. The buyer, an undisclosed, due to confidentiality agreements, local investor considered himself fortunate to secure such a quality asset.”

Walgreen Buys Drugstore.com For $400M

Walgreens To Buy Drugstore.com For $400M

Expanding further into the fast-growing business of online retail, Walgreen Co. said Thursday it will buy Drugstore.com for more than $400 million.

The deal comes just weeks after the Deerfield-based drugstore giant said it would shed its pharmacy benefit management business for more than $500 million. That deal, Walgreens said, would help it better focus on its primary business of serving customers’ daily health and living needs.

“Our acquisition of Drugstore.com today significantly accelerates our online strategy to leverage the best community store network in America by becoming the most convenient choice for health and daily living needs whether customers shop online or in our stores,” said Walgreens chief executive officer Greg Wasson in a statement announcing the deal.

calkain.posterous.com

NNN Lease Investment Sale of North Arlington Walgreens

Calkain Companies Brokers $7.3MM NNN Lease Investment Sale of North Arlington Walgreens
Reston, VA –Calkain Companies, a national real estate investment brokerage firm, has procured the sale of a new triple net (NNN) lease Walgreen's in North Arlington, Virginia at a 6.8% cap rate.
Washington-area pharmacies have slowly crept forward to grab increased attention from investors spanning the world.
In a bid to scoop up smaller real estate gems, known as triple-net-lease properties, some investors have been smitten by the burgeoning drugstore sector. By July 1, the sector's dollar value in trades had already reached two-thirds of last year's total volume.
In triple-net leases, tenants — not landlords — hold full responsibility for managing or maintaining the space and paying its taxes or insurance. While those leases are often held by freestanding dollar stores, banks, casual dining and fast-food outlets, drugstores have weathered the recession to emerge as one of the triple-net sector's most stable industries.
Investors say drugstores' creditworthiness, central locations, 25-year-plus lease terms and newer buildings, typically no more than 10 years old, make them alluring prospects.
Rick Fernandez, Managing Director of Calkain Urban Investment Advisors, the urban market division of Calkain Companies, represented the seller in the transaction. "NNN investment property in the DC Metro area is hard to find and quality real estate such as this North Arlington Walgreen's is harder still," explained Fernandez. "The intrinsic value of the real estate, strong credit of the tenant and the international appeal and esteem with which the DC Metro area is held by investors across the globe offered a unique opportunity to the investor," commented Jonathan Hipp President and CEO of Calkain Companies. The buyer, a group of international investors, acquired fee simple interest in the ground and structure.
The transaction closed within the last thirty days and was recorded in the public record.