NORTHBROOK, ILL. — The Boulder Group, a Northbrook-based net lease investment brokerage firm, has arranged the sale of a portfolio of nine East Coast Walgreens stores for $68.7 million. The buyer is a Midwest-based institutional investor that acquires core, net leased assets.
“This portfolio represented a rare opportunity for an investor to acquire a large portfolio of long-term, triple-net leased Walgreens properties and we were able to achieve a sale price within one percent of the asking price,” says Randy Blankstein, president of The Boulder Group.
Blankstein and Jimmy Goodman of The Boulder Group represented the seller, a private investment company, in the transaction. The buyer was self-represented.
The portfolio of nine Walgreens properties include the following:
• 980 Farmington Ave.; Berlin, Conn. (Hartford MSA)
• 1036 W. Main St.; Branford, Conn.
• 880 N. Montello St.; Brockton, Mass. (Boston MSA)
• 1 Glenwood Ave.; Dover, N.H.
• 17 Crystal Ave.; Derry, N.H.
• 897 Main St.; Melrose, Mass. (Boston MSA)
• 20 W. Kings Highway; Mount Ephraim, N.J. (Philadelphia MSA)
• 1131 U.S. Highway 46; Ledgewood, N.J. (New York MSA)
• 500 Egg Harbor Road; Sewell, N.J. (Philadelphia MSA)
The recently sold portfolio of nine Walgreens stores are located in the Northeast states of Connecticut, Massachusetts, New Hampshire and New Jersey.
In the single-tenant, net leased retail market, cap rates have risen 3 basis points from 7.72 percent in the fourth quarter of 2011 to 7.75 percent in the first quarter of 2012.
The cap rates on net leased retail properties have increased due to the influx of lower-quality assets, meaning those with non-credit tenants, short-term leases and ancillary market locations. In the first quarter of 2012, 2,976 retail properties were added to the market, which represents a 19.6 percent increase to supply, according to The Boulder Group.
However, Walgreens’ cap rates have compressed 5 basis points from 6.5 percent in the fourth quarter of 2011 to 6.45 percent in the first quarter of 2012. Pharmacy properties like Walgreens remain attractive to investors because of the availability of credit tenant lease financing, according to The Boulder Group. (In this type of financing, the landlord borrows money to finance the property and pledges as security the rents to be received from the tenant.)
Goodman, partner of The Boulder Group, adds,“Walgreens properties with over 20 years of lease term are one of the most sought after assets in the single-tenant net lease market, and we had strong demand for this portfolio.”
— John Nelson