Mesirow Realty Sale-Leaseback Inc. sold the recent portfolio to Harbor. Each of the properties is leased for a remaining term of 24 years, with 10 additional five-year option periods. The local property is a 13,013-square-foot store within two miles of Interstates 57 and 94. The Inwood store is 12,900 square feet, and is part of the Hagerstown-Martinsburg Metropolitan area.
T. Richard Litton Jr., president of Harbor, said the current yields and cap rates make CVS locations a great buy. "The long-term, in-place leases to CVS provide stability of future cash flows," Litton said in a statement. For example, the portfolio purchased in December had an 8.15% cap rate, he said. Triple-net buyers like drug stores, retail experts say, because of growing medication needs, especially by the increasing average age of Americans, and the stores have taken over as the convenient place to buy sundries.
Drug store cap rates have started rising again after dropping to a low of about 6.25% between 2006 to 2008, to an average of 7.3% in Q4, according to a Real Capital Analytics market report on drug stores. Price per square foot has also risen from about $270 per square foot in late 2005 to $446 per square foot today, according to the report. The top lenders for drug store deals include Wells Fargo, UBS and California Republic Bank, the report said.
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