Net Lease Profile: Fred's Super Dollar
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PrintFred'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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