NASHUA, NH-Net Lease Capital closed a $237-million sale for an undisclosed buyer. The deal was part of a 1031 exchange where the buyer was grabbing a portfolio of 49 properties as replacement properties. The portfolio is composed solely of CVS properties located throughout the country. Net Lease Capital could not disclose the buyer or seller, but SCP Capital confirmed to GlobeSt.com that the portfolio was assembled from their CVS properties.
Net Lease Capital sough these properties because of CVS CareMark Corp.’s corporate guarantee, which holds that rental payments for all properties are guaranteed over the entire length of their leases, which are long-term, regardless of the property’s individual performance. Net Lease Capital’s Carl Christensen tells GlobeSt.com noted that gaining all the properties from a single seller made the short timeline easier, as well as lessened the transaction costs associated with a deal of this scope.
“Because of the time-crunch with the 43-day identification period in a 1031 exchange, pulling together enough property, controlling it and doing all the pieces is quite a task with a transaction of that size, so we were brought in by the advisor as a group with a relationship over time,” he explains. The 1031 exchange was used to off-set capital gains taxes from the previous sale of an undisclosed portfolio of properties.
“The states and locations were picked based on good locations, but with the caveat of low-transfer tax states,” Christensen notes. “There are some states where entity structures are a certain way and we avoided those situations,” where tax codes create a more complications. Some of the states with more preferable structures are Nevada and the Carolinas, to name only a few examples.
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