ORLANDO-A Florida developer sold a 14,490-square foot Walgreens located in Kissimmee just outside of Orlando on July 20th for $5.6 million. The price per square foot for the nearly 11-month old single-tenant building was $386 per square foot, which is about average for this kind of investment, says Paul Nudelman, an investment specialist with the Miami office of Marcus & Millichap who represented the buyer, a Southwest Florida real estate investment partnership which owns one or two other single-tenant buildings with triple net leases.
The Walgreens is located on a major road leading to Disney World and I-4. As of August 2009, Walgreens operated 7,496 locations in 50 states, the District of Columbia, Puerto Rico and Guam.
The building, which has a 25-year-lease which started in September 2009, has a cap rate of 7.56%, which is what Walgreens deals usually trade at, says Nudelman. The rent is $29.22 per square foot or $434,436 per year . Walgreens typically has 25-year leases, he says.
The buyers wanted a secure tenant which they wouldn’t have to manage, says Nudelman. “These net-lease investments sell quite well, because they offer a guaranteed income,” he says. “The rating on Walgreens is as good as you can get and the likelihood the company will leave is small so the price per square foot (for one of their buildings) is high,” says Nudelman.
“The reason that the Walgreens wasn’t sold when it was first finished last fall, “ says Michael J. Jaworski an investment specialist in Marcus & Millichap’s Tampa office, who represented the seller, was that capital gains taxes would be higher if the building was sold right away. It was put on the market in February or March of this year, he says.
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