Fred's Super Dollar stores offer net-lease investors an attractive choice when compared to other discount property chains such as Dollar General, Dollar Tree and Family Dollar. Newer Fred's properties are typically priced at 8.5% to 8.75% cap rates; slightly higher for older locations. Newly built retail stores are commonly constructed on 1 1/2 to 2 1/2 acre sites in small to mid-sized markets throughout southern states, improved with 16,500 SF single tenant buildings that contain on-site pharmacies, drive-up windows and in some cases outside sales areas for seasonal merchandise. Fred's leases are typically 12 year NN with flat rents; increases during options.
Pros:
- 1/3 of Locations Operate Full-Line Pharmacies
- Most Stores Operate as Fee Simple Leases Allowing for Depreciation
- Typically Feature Higher Cap Rates
Cons:
- Most Locations are NN Leases, So Landlord Responsible for Roof and Structure
- Not as well Known as Competitors Such as Dollar Gerneal, Family Dollar, etc
- Regionally Isolated in the Southeast
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
