DAYTONA BEACH, FL-A Florida LLC has purchased a Walgreen’s from a Florida-based private investor for $2.39 million. The 13,841-square-foot Walgreen’s is the latest in a string of drug store sales in Florida.
Leon Brockmeier and Patrick O'Halloran, retail investment specialists in Marcus & Millichap's Tampa and Atlanta office respectively, represented the seller, a Florida-based private investor. James Defalco of Orlando-based James Defalco Inc., represented the buyer, a limited liability company based out of Florida.
Despite cap rates on Walgreens as low as 6.9 in Florida markets like Miami, Brockmeier tells GlobeSt.com that the Daytona Beach store sold at a 9.4 cap rate. “We got over 20 offers on the property,” Brockmeier says. “There is still plenty of appetite for strong credits tenants like Walgreen’s, CVS and 7-11 and this was an attractive cap rate.”
Although Walgreen’s are yielding top dollar in Miami, Tampa, Orland and even Jacksonville, the 2620 South Nova Road location in South Daytona Beach fetched about the same price the seller paid when he bought it in 1997, Brockmeier says.
“In net lease deals, any time you get below 10 years remaining on the lease term financing gets very difficult,” Mez Birdie, director of Retail & Investment Services at NAI Realvest in Maitland, tells GlobeSt.com. “That is one reason why you would see cap rates rise by 50 to 100 basis points. Below average sales would also increase the cap rate.”
Indeed, Brockmeier says the seller exited the investment because Walgreen’s only had six and a half years left on the original lease and store sales per square foot were low. The seller is going to 1031 his cash into a CVS.
“The seller was an older gentleman and he was trying to get away from the risk of Walgreen’s possibly not renewing the lease and having to retenant the building,” Brockmeier says. “He paid cash for the property in 1997, so he got back his purchase price and drew rent for 13 and a half years. It was a win-win situation.”
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