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7-Eleven
Advance Auto Parts
Affordable Dentures
ALDI
Applebee's
Arby's
Ashley Furniture
AutoZone
Bank of America
BankUnited
BB&T Bank
Best Buy
BMO Harris Bank
Bojangles'
Burger King
Captain D's
Chase Bank
Chick-fil-A
Chipotle
Church's Chicken
Circle K
Cracker Barrel
CVS
Dairy Queen
DaVita
Dollar General
Dollar Tree
Dunkin' Donuts
Family Dollar
FedEx
Fred's Super Dollar
Fresenius Medical Care
Hardee's
Hobby Lobby
IHOP
KFC
Kohl's
Mattress Firm
McDonald's
Napa Auto Parts
O'Reilly Auto Parts
Panera Bread
PDQ
Pep Boys Auto
PNC Bank
Red Lobster
Rite Aid
Sheetz
Shell Oil
Sherwin-Williams
Starbucks
Steak 'n Shake
SunTrust
Taco Bell
TD Bank
Tractor Supply Co.
Verizon
Walgreens
Walmart
Wawa
Wegmans
Wendy's
Zaxby's
  Walgreens


Average Property & Lease

Average Sale Price$7,218,594
CAP Rate (12mo avg with 10+ lease term)5.56%
NOI$393,117
$/Square Foot$300 - $400
Building Size14,500 sf
Lot Size1.8 +/- acres
Lease Term15 Year NNN
EscalationsNone
CREDIT RATING
BBB
S&P
Baa2
Moody's
view credit rating chart
View Net Lease Property Listings at CALKAIN.COM Last Updated: September 9, 2016
Net Lease Advisor Overview

The poster-child of net lease properties, Walgreens has been a highly traded investment property given the low risks typically associated with these drugstore properties. Additionally, the drugstore sector remains stable given is non-discretionary merchandise offerings.

On the real estate side of things, Walgreens demands premier hard corner locations greater than 1.00 acre. Generally, sites are 1.5 - 2.0 acres to fit their store prototypes of 14,500 SF, although units can range from 10,800 SF - 15,000 SF. To compete with rival CVS, Walgreens has generally been willing to pay premier rental rates to secure prime sites with a primary lease term of 25 years. The most significant lease variation from Walgreens of late has been the difference in their renewal options, previously requiring eight to ten renewal options of five years in length; they recently signed a number of leases that were 75 years in length, however after the 25th year Walgreens has an annual cancellation option, essentially creating 50 1-year renewal options. This small variation created significant concern for investors because at the end of the initial 25-year lease term, these assets will not be financeable.

Pros

Cons

  • Investment Grade Credit
  • Corner Locations
  • Long absolute NNN leases
  • No rental increases
  • High initial rental rate
  • Annual cancellation option after initial term
Tenant Description

Walgreens Boots Alliance, Inc is currently the largest retail pharmacy in the U.S. and Europe, with 13,100 stores in over 11 countries.

Walgreens Boots Alliance was created through the combination of Walgreens and Alliance Boots in December 2014. This transaction brought together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years.

Walgreens is a market leader in the U.S. and has 8,173 retail stores which includes Walgreens and Duane Reade. Walgreens owns 15% of these retail locations and rest are leased. Walgreens Boots Alliance stated that they will close about 200 less-profitable U.S. Walgreens stores and open the same number of stores in new locations. The stores will close during the next three years, with the last closing no later than the end of 2017.


WALGREENS TREND
CAP Rate

2015 avg: 5.89%

2016 avg: 5.64%

RECENT SALES

Queen Creek, AZ

$2,600,000 | 4.44%

Winter Springs, FL

$4,221,000 | 6.71%

MORE INFO
www.walgreens.com
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