If you follow our blogs, you will know the Westwood team loves Dollar General triple-net (NNN) lease property investments – they are stable, hands-off, income-producing properties with a multitude of investor benefits.
We also like DG for its willingness to explore market demands and trends and evolve with consumer needs, which ultimately affects the NNN property market. One example is Dollar General’s latest expansion – an increase in affordable health and nutrition offerings.
So, how and why does this expansion of products and services influence your NNN investment choice?
As DG Grows, NNN Investors Can Realize Even More Asset Stability & Potentially Greater Resale Value
We will never say with complete certainty that Dollar General net lease investments are “recession-proof.” However, in all economic climates, the company has continued its growth trajectory, and as the last year has proven, DG gets even stronger in tough times. When consumers are strapped for cash or wanting to save money, they are more inclined to shop for lower-priced basics, which DG offers.
Now, according to a company announcement dated July 7, 2021, newly appointed Vice President, Chief Medical Officer, Albert Wu, M.D., will help expand Dollar General’s complementary health and nutrition products and services. This will include but is not limited to an increased selection of affordable cough and cold, dental, nutritional, medical, health aids, and feminine hygiene products. This expansion comes at the request of DG’s customers, especially in rural communities.
What does this mean for Dollar General net lease investors? The more sales a location generates, the more reliable and valuable that location becomes, increasing the chance for lease renewal and offering the potential for a higher resale value. Along with the long list of other benefits (including maintenance-free, guaranteed monthly income and tax advantages) these properties really are one of the best NNN investment opportunities on the market.
75% of the U.S. population lives within five miles of a Dollar General store. DG is becoming the sole shopping choice for many communities, even where there is a Walmart and a large grocery chain nearby.
Dollar General Q2 Earnings Report: Good News for Real Estate Investors
Though Dollar General reported slightly lower net sales (0.4%) in Q2 2021, its progress with new initiatives, like its store-within-a-store concept pOpshelf, the execution of 750 real estate projects, including larger-footprint stores, its rollout of DG Fresh, and the addition of another distribution center, have moved the company into even more dependable territory.
An example of its commitment to its real estate value (and customers), according to the second quarter 2021 earnings report, is the “$248 million spent for improvements, upgrades, remodels, and relocations of existing stores; $125 million for store facilities, primarily for leasehold improvements, as well as fixtures and equipment in new stores; and $19 million for information systems upgrades and technology-related projects. During this time, Dollar General opened 270 new stores, remodeled 477 stores, and relocated 25 stores.”
Looking ahead, Dollar General expects overall sales growth and is holding to its plans to execute a total of 2,900 real estate projects, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations in FY 2021.
Is Buying a Dollar General NNN Property a Smart Idea in this Uncertain Economy?
You may be wondering, with all the tax changes on the horizon, supply chain upheaval (which DG is managing better than most), COVID-19, and the uncertain economy, is buying a Dollar General NNN property still a good idea? In our expert opinion, yes. We believe Dollar General is one of the strongest NNN investment opportunities.
For the ten reasons listed here, DG stores are a wise investment choice in any economy and make a super addition to any investment portfolio.
- Typically sell between $1–2 million.
- Average 12-month cap rate of 5.00–6.50%.
- Most are absolute NNN leases for responsibility-free ownership.
- Strong corporate credit and investment-grade ranking.
- All leases are corporate-guaranteed.
- 15-year lease on new construction.
- Typically, 10% rent increases in every 5-year option period.
- More locations, expansions, and relocations boost retail market share.
- Robust, reliable growth, companywide.
- Affordable, needs-based products and services offer strength in any economy.
Additionally, purchasing a Dollar General property is usually a straightforward transaction, making these assets a popular choice for 1031 exchanges and those new to NNN investing.
To Wrap it Up: Dollar General Expands Offerings Again, Providing a Strong NNN Investment Opportunity
As Dollar General expands its retail product and service offerings again, with a promise to continue adding locations nationwide, we are confident that these properties provide a strong NNN investment opportunity in this uncertain economy. No other investment type offers the surety of income that triple net investments offer, and within that asset class, Dollar General is at the top of the list.
How to Purchase a Dollar General Property
Whether you are a seasoned commercial real estate investor or new to the market, the high demand for and limited supply of Dollar General properties is making it challenging to find one on the open market. That’s where Westwood Net Lease Advisors is of great value. Daily, we reach out to our nationwide network of developers, sellers, and brokers and use our proprietary database to find up-and-coming properties for sale, which offers countless advantages to our buyers, often including first-right-of-refusal and little, if any, competition.
When you collaborate with our expert advisors, we represent you and your best interests at no charge, from the pre-property search through closing and thereafter. If you’re planning a 1031 exchange, we’ll help get the right property for your goals, minimize the stress of a tight timeline, and close your transaction on time.