Walgreens Portfolio Sells for $39M

CHICAGO—Even though many types of single tenant net leased properties have attracted interest from investors, sending cap rates on a long-term plunge, name brand drug stores, especially Walgreens, draw more attention. The Boulder Group, a net leased investment brokerage firm in suburban Chicago, for example, has completed the sale of a portfolio of five Walgreens located throughout the US for $39,011,803. The properties are located in Maine, Massachusetts, Minnesota, and South Carolina.  

Randy Blankstein and Jimmy Goodman of Boulder represented both the buyer and seller in the transaction. The seller was a Midwest-based private partnership and the purchaser was a Midwest-based institutional investment firm.

“This portfolio represented a rare opportunity for an investor to acquire a large geographically diverse portfolio of long term triple net leased Walgreens properties,” says Blankstein, president of Boulder. The majority of the interest was among international investors, 1031 exchange trade buyers, and institutions.

According to a recent research report published by Boulder, cap rates for Walgreens and CVS properties reached a historic low in the first quarter of 2014. Cap rates for Walgreens properties compressed by 15 bps from the third quarter of 2013 to the first quarter of 2014.

“Part of the compression can be attributed to the significant decline of 9% in the supply of drug store properties currently being marketed,” according to the report. The Walgreens rate stood at 5.6%, with CVS at 5.9% and Rite Aid at 7.75%.

The portfolio included the following Walgreens properties:

• 720 Main St., Clinton, MA
• 32 Main St., Lakeville, MA
• 268 Main St., Belfast, ME
• 1112 Civic Center Dr., Rochester, MN
• 1537 Charleston Hwy., West Columbia, SC

“Walgreens properties with 20 years of lease term are one of the most sought after assets in the single tenant net lease market,” says Goodman, a partner at Boulder, “and we had strong demand for this portfolio.”