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FAIRFAX, VA-Calkain Cos., headed by Jonathan Hipp, has closed on what it says is the largest net leased retail deal in the Washington, DC area in years. Representing both buyer and seller, it facilitated the trade of a co-branded Walgreens and PNC Bank ground lease here for $13.8 million. The sale price represented a 5.9% cap rate. Still under construction, the parcel is located in the southwest corner of Route 29 and Nutley Road. The building is expected to deliver this June, Jeff Bogart, tax strategy specialist with Calkain, tells me. The buyer is a local firm, while the seller is the Washington Property Co. There have been many Walgreens ground leases trading in the area over the past three years, but none at this low of a cap rate, Bogart explains. “That was due to a variety of factors, the first of which is that the structure of Walgreens ground leases are traditionally at a 20-year initial term with a 10% rental increase in year 11. However, Walgreens wanted this particular property very badly, so it negotiated  a lease that had a 10% increase every five years, which is extremely rare for Walgreens.” PNC Bank negotiated similar terms, he says. Bogart adds he has only seen one other Walgreens lease structured in a similar fashion, but that was in California.

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