OAK BROOK, IL—US dollar-stores have experienced good times during the nation's slow economic recovery as consumers hunt around for cheap deals. And investors have noticed. The Inland Private Capital Corporation, an Oak Brook, IL-based firm, for example, says they just completed what they term a profitable sale of a 10-store portfolio of retail assets fully leased to an affiliate of Dollar General Corporation, the largest US dollar-store chain.
“There is currently very strong demand in the marketplace for properties leased to affiliates of Dollar General Corporation, which was upgraded to an investment-grade tenant by Standard & Poor's,” says Rahul Sehgal, chief investment officer of Inland.
Dollar General's net income for the year that ended Feb. 1 was $952.7 million, a 24% increase. And earlier this year, Moody's Investors Service upgraded the company's debt to investment grade. “Moody's views the dollar store sector favorably and expect that it will continue to grow given its low price points and its relative resistance to economic cycles,” Moody's said.
“While these assets were providing monthly cash flow in line with our original estimates, we believe this increase in Dollar General's credit rating, along with the length of the remaining lease terms and the timing of when they were acquired in the market cycle, made it an ideal time to sell,” adds Sehgal. “The result was a substantial return on investment for our investors.”
Inland facilitated the sale of the stores on behalf of the Delaware Statutory Trust that owned the properties and secured a total return on investment to the DST stakeholders of 120.48%. The properties in this portfolio are located in Alabama and Tennessee and were acquired in 2011 for about $11.6 million.
The Oak Brook-based IPCC offers replacement property investments for persons participating in a 1031 tax-deferred exchange, and is a part of the Inland Real Estate Group of Companies, Inc. As of September 13, 2013 IPCC had sponsored 134 private placement programs. The 134 private placement programs include 274 properties, with over 15-million-square-feet of gross leasable area under management.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
