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Home » Blog » Case Study: Walgreens with 10-Year Flat NNN Lease Sells Quickly

Case Study: Walgreens with 10-Year Flat NNN Lease Sells Quickly

Sale price: $4, 815,000

Closing date: December 20, 2019

Cap rate: 6.43%

Partnership Sells Walgreens NNN Property in 1031 Exchange

A two-person partnership was looking to diversify their real estate portfolio with properties that carried longer leases than the ten years left on their current Walgreens. Their plan was to sell the Walgreens in Cumming, Georgia, and purchase two other NNN properties with full-term leases.

Having previously conversed with Chris Schellin, President of Westwood Net Lease Advisors, the partnership reached out for assistance with both selling their Walgreens and the 1031-exchange buying process. The challenge in selling this Walgreens property was the remaining ten-year, flat lease – most NNN investors prefer a full-term lease.

The Process

Westwood received the exclusive right to list and sell the partnership’s Walgreens. Schellin listed the property right away and created a marketing campaign that went out to 100,000 prospects. This campaign presented the numerous benefits of owning an absolute NNN Walgreens property:

  • Walgreens is a mission-critical retail pharmacy with essential goods that sell in any economy.
  • Walgreens is one of the nation’s largest drug store chains; approximately 8 million customers interact with Walgreens per day.
  • This iconic investment gains much of its value from the real estate – typically a 1.5-acre, hard-corner parcel with maximum visibility and property value.
  • Walgreens pays premium rental rates to secure Grade A sites with primary absolute NNN lease
  • Stores operate with a corporate-guaranteed lease from an investment-grade, BBB-rated tenant.
  • Minimum ten-year lease with extension options (this property only).
  • Higher than average cap rate that holds steady for the ten years.

The Result

Almost immediately, a nearby Atlanta buyer, who was also in a 1031 exchange, made a solid offer and it was accepted. He was thrilled to invest in an existing Walgreens property in a prime location. With this NNN purchase, he fulfilled his 1031 exchange requirements and so did the sellers.

To Wrap it Up – Partnership Sold Walgreens & Purchased 2 New NNN Properties

From the sale of their Walgreens, the partnership was able to purchase a pre-construction AutoZone NNN ground lease and is under contract on a pre-construction Firestone fee-simple property worth a total of $4.5M, which defers the capital gains tax. See our AutoZone Case Study for more information on how this partnership secured two special properties.

If you’d like to learn more about the 1031 exchange and all the benefits of NNN investing, call or email Chris Schellin, President of Westwood Net Lease Advisors, at 314-563-2208, for a free, no-obligation consultation.

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Tags: 1031 exchange, Walgreens NNN, Walgreens property for sale