Fred's Super Dollar stores offer net-lease investors an attractive choice when compared to other discount property chains such as Dollar General, Dollar Tree and Family Dollar. Newer Fred's properties are typically priced at 8.5% to 8.75% cap rates; slightly higher for older locations. Newly built retail stores are commonly constructed on 1 1/2 to 2 1/2 acre sites in small to mid-sized markets throughout southern states, improved with 16,500 SF single tenant buildings that contain on-site pharmacies, drive-up windows and in some cases outside sales areas for seasonal merchandise. Fred's leases are typically 12 year NN with flat rents; increases during options.

Pros: 

  • 1/3 of Locations Operate Full-Line Pharmacies
  • Most Stores Operate as Fee Simple Leases Allowing for Depreciation
  • Typically Feature Higher Cap Rates

Cons: 

  • Most Locations are NN Leases, So Landlord Responsible for Roof and Structure
  • Not as well Known as Competitors Such as Dollar Gerneal, Family Dollar, etc
  • Regionally Isolated in the Southeast


Read Full Profile. 

NOT FOR REPRINT

© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.