|
OCEANSIDE, CA—The second Walgreens to trade in San Diego County in the last year represents buyers' appetite for single-tenant retail assets with long-term leases and national tenants in good areas, Hanley Investment Group EVP Kevin Fryman tells GlobeSt.com. HIG recently arranged the sale of a single-tenant absolute net-lease Walgreens property at 3507 Cannon Rd. here. The purchase price was $7.4 million, which represented a cap rate of 5%.
Fryman, along with Ed Hanley, president of HIG, represented the seller, a private investor based in Beverly Hills, CA. The buyer, a private investor from Northridge, CA, was represented by Jason Flashman/Flashman Investment Group of Peak Commercial of Los Angeles. The sale represents only the second Walgreens to trade in San Diego County in the last 12 months.
“According to CoStar, only eight Walgreens with more than 10 years remaining on their initial lease have sold in California in the last 12 months for an average cap rate of 5.35%, compared to 13 transactions in the 12 months prior to that for an average cap rate of 5.03%,” says Hanley. “A single-tenant investment such as Walgreens provides long-term cash flow with relatively low risk. As investors continue to look for security, we expect that the demand for these high-quality single-tenant investments will remain strong through 2017.”
|
Fryman tells GlobeSt.com exclusively that this transaction is another example of a buyer trading out of apartments to acquire a retail asset. “Many buyers are looking for high-quality single-tenant retail assets that require little to no maintenance. Unlike apartment communities, the absolute triple-net lease offers zero landlord responsibilities since the tenant is responsible for the costs of real estate taxes, property insurance and maintenance in addition to rent.”
This sale is also another example of buyers' appetite for single-tenant retail assets that have long-term leases with national tenants located in good areas, Fryman adds. “The value for this property was driven by the absolute triple-net lease of a national credit tenant Walgreens, combined with the fact that there was more than 15 years remaining on its primary lease with ten five-year renewal option periods and that Walgreens had been at this location for nearly 10 years.”
Fryman adds that HIG's Carlos Lopez, in conjunction with Eastdil Secured, is currently marketing a single-tenant Walgreens for sale in Honolulu. The single-tenant flagship store is a 36,000-square-foot, two-story Walgreens, which opened in February 2015.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
