Net Lease Report: Dollar Stores

Over the past few years Dollar Store properties have become some of the most attractive Net Lease Investments available for buyers and investors. The popular stores are still single-handedly changing the net lease investment market, which has traditionally been dominated by drug store, fast food and automotive retail concepts. It is the only sector within net lease that maintains an adequate supply due to their attractively priced products. Sales revenues have soured for the three main Dollar Stores: Dollar General, Family Dollar, and Dollar Tree. Dollar Store properties generally offer a strong corporate guaranty, investment grade credit, 15 year NNN leases, and can still be bought at or above a 6% cap rate. Dollar stores have experienced increased demand for new construction and command a premium over asking cap. Dollar stores have become strategically stronger by reducing their scope of operations and focusing on one simple formula–the dollar model. The average cap rate of Dollar Store transactions in 2014 is around 7.94%.