BARRINGTON, IL-Two pharmacies in the Chicagoland area have soldin net lease deals totaling $15.1 million. A San Francisco-basedindividual doing business under the name Walgreen’s Barrington 1LLC acquired a Walgreen’s property for $9.28 million, while AgreeRealty Corp. purchased a CVS property for $5.8 million.

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The trades illustrate the cap rate differential between apreferred tenant in an infill location and a lesser quality tenantin an emerging location, according to Randy Blankstein, presidentwith The Boulder Group, a Northbrook, IL-based net lease brokerageand investment firm. Blankstein and Jimmy Goodman, also of TheBoulder Group, brokered the Walgreen’s sale.

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Both properties have 24-year leases with their respectivetenants. The Walgreen’s property, located at 189 Northwest Hwy. inthe affluent city of Barrington, IL, traded at a 7.3% cap rate. TheCVS asset, located at the intersection of West Algonquin andLakewood Roads in the emerging market of Lake in the Hills, IL,sold at a 7.76% cap rate – a difference of nearly 40 basis pointscompared to the Walgreen’s property, Blankstein pointed out.

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Blankstein tells GlobeSt. that Walgreen’s is the preferredretailer in the pharmacy space. “This was one of the highest pricedWalgreen’s sold in 2010 and demonstrates the desirability of coresingle tenant properties in the present market environment,” hesays. “Net lease properties with investment grade tenants in majormetro areas are receiving, very strong investor interest, but thosein second tier and third tier markets still pretty shallow.”

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Moreover, Lake in the Hills is a developing residential area onthe outskirts of Chicago where growth has slowed over the pastcouple of years. Barrington, on the other hand, is awell-established and high-barrier-to-entry market.

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The private investor behind Walgreen’s Barrington 1 LLC acquiredthe pharmacy property as part of a 1031 exchange out of amultifamily property in San Francisco. The buyer put credit-tenantlease financing on the property that matures at the end of thelease term, Blankstein notes. The seller was a preferred Walgreen’sdeveloper based in Chicago.

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Meanwhile, Agree Realty acquired the CVS property from thedeveloper, Goodman Properties of Jenkintown, PA. Currently, theFarmington Hills, MI-based investor owns and operates a portfolioof 75 primarily net leased properties located in 15 states andtotaling 3.5 million square feet.

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“Agree is a buyer that has become more active as of late,”Blankstein notes.

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