Dollar Tree is an attractive tenant for the Net Lease Investor who prioritizes a higher cap rate. New locations typically range between 8,000-12,000 gross sq. ft. Freestanding locations are typically located in a strong retail corridor with street presence, easy ingress/egress, and ample parking. Dollar Tree also targets regional or neighborhood centers, anchored by "big box" discounters or dominant grocery stores for their stores. Though not as flashy as other prominent net lease tenants, Dollar Tree has found success focusing on its core consumer market of value minded customers.
The recession of 2009 and its lingering effects have prioritized the need for value in middle America. As a result, tenants such as Dollar Tree have found success catering to the demand for lower priced items. As such, Dollar Tree offers some protection to net lease investors concerned about potential economic downturns. Furthermore, the limited supply of net lease product overall has increased the attractiveness of this value focused tenant.
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Pros
>Higher cap rates
>Lower Price Point
>Stable, value focused store model
>NNN Leases available
Cons
>Lease terms somewhat short at 10-15 years
>Not rated by S&P or Moody's
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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.
