Summer Rush of Triple-Net Deals Starts to Cool

TAMPA, FL—Triple-net deals are fewer and further between in Florida, especially on the drugstore front. But summertime saw a rush of triple-net trades worth noting.

Calkain Cos. and Noble Properties both inked deals. Calkain brokered the sale of two investment properties—one along Florida's West Coast and the other in the Tampa Bay area—while Noble closed on another Walgreens. Financial terms on the deals were not disclosed.

Both of the Calkain deals are subject to long-term ground leases, one to Walgreens and the other to JP Morgan Chase. Each site was part of the redevelopment of a former Wells Fargo facility by the seller, a Florida-based private developer.

"This deal was a win-win for both parties, allowing the seller to lock in a pre-sale and assure protection from any increase in the long term capital gains rate," says Patrick Nutt, managing director at Calkain, who represented the buyer and seller. "The buyer was able to secure a fair return on a trophy asset at today's pricing in a compressed cap rate environment."

Noble sold a Walgreen's on a prime corner in Cape Coral, FL. The nearly 16,000-square-foot store includes an attached liquor store and is open 24 hours. Sales at this location are nearly $12 million, without counting the liquor component.

Another Florida-based buyer completed a 1031 exchange on a two-tenant property on one acre of land in Spring Hill. It sold for $1.61 million, which is an 8% cap rate.

The site offers a 9,000-square-foot building divided into a 7,000-foot space for a Pet Supermarket and 2,000 feet for Humana. The seller, an experienced private owner and long-time client of Calkain, was looking to liquidate to secure other opportunities.

"We quickly recognized the hurdle of the current lease terms being unfavorable along with the tertiary and lesser-known Florida location of Spring Hill," says Teal Henderson, an associate at Calkain who represented the seller. "We counseled the seller in reaching out to the tenants and restructuring with more attractive terms."

Sean McConnell, SVP and tenant representation lead in Florida for Jones Lang LaSalle, says he's seen a significant upside in retail across the board. He also says Florida is positioned to lead the nation in terms of a retail recovery. "Markets seem to hate uncertainty," McConnell says. "Once we get through the November election, a level of normalcy can return to the markets and we'll witness a new transaction equilibrium that results from tenants and investors having more certainty on future monetary and tax policy."