PHOENIX-A local businessman has spent $10.65 million for two Walgreen drug stores and plans to close on a third one in the first quarter.

Arnold Smith, former owner of Smith Pipe & Steel Co., used 1031 exchange funds to buy the retail properties located at the hard corner of South Higley and East Germann roads in Gilbert and the intersection of South McQueen and East Ocotillo roads in Chandler. Both properties were sold by development affiliates of Evergreen Devco Inc. from Glendale, CA, which builds community and neighborhood centers nationwide. No ground leases are involved in either transaction or the third property in Buckeye.

According to Netty Wisbaum with Cuellar Realty Services Inc. in Phoenix, the Gilbert store, purchased for $5.85 million, has just been built. The property in Chandler, acquired for $4.8 million, is nearly complete. The Buckeye store will deliver in January. The deals, each sealed with a 20-year lease, closed with a 6.5% cap rate.

"We entered into negotiations for stores that were yet to be built this year," Wisbaum, the buyer's broker, tells GlobeSt.com. "This was a situation in which the seller retired, but wanted to invest in some local property. We were able to get these three stores on the basis of the buyer's creditworthiness."

The specific acreage and building sizes weren't readily available. Wisbaum says that, on average, most Walgreen stores take up two acres and average between 13,000 sf to 15,000 sf.