Dollar General, Romance, AK
6.00% cap rate
In the spring of 2019, a first-time investor new to real estate and the triple-net (NNN) market, contacted Westwood Net Lease Advisors to learn more about the NNN buying process and locate a profitable income-producing property. In the end, she chose a responsibility-free Dollar General (DG) in Arkansas that operated with a 15-year lease and provided over $75K in annual NOI.
With a new investment opportunity on the horizon, in May 2021, this same client reached out to Westwood advisors Mike Kocur and Phil Bundren again to sell this prime Dollar General property. She understood the market was hot – demand was exceeding supply for these types of properties – so the opportunity was there to turn a profit. But just how much and how fast?
The Challenge – Seller Needed to Sell DG Fast to Take Advantage of New Investment Opportunity
In early summer of 2021, essential businesses like Dollar General were thriving and triple net investors were buying properties at a record pace, driving down cap rates. Because of this, Kocur’s and Bundren’s client wasn’t sure she’d be able to offer a high enough cap rate to sell as quickly as needed to take advantage of a new investment opportunity.
Kocur and Bundren shared that even with a slightly compressed cap rate of 6.00%, this NNN property offered a higher cap rate than most commercial real estate (CRE) when factoring in the lack of landlord expenses, tax opportunities, and additional investor benefits that other CRE couldn’t match.
In fact, Bundren said, “During 2020 and 2021, we have closed many NNN deals for clients with positive leverage driving actual cash-on-cash returns that are significantly higher than the cap rates when purchased.”
The Process – Selling to the Right NNN Buyer at the Right Price in a Tight Market
When helping clients sell or buy a NNN Dollar General property with a long-term lease in a tight market, the Westwood team urgently notifies their vast nationwide network of brokers, sellers, and developers and utilizes their marketing expertise to get the best offer for their clients with the fewest potential issues and the quickest closing.
This case was no different – urgency, experience, knowledge, and network all played a role in the NNN selling process. As soon as the Dollar General property was on the market, Kocur and Bundren began accepting letters of intent (LOI) and considering offers. Within a week, they assisted the seller in choosing the best offer from a buyer with the ability to close quickly. The cash buyer, represented by another Westwood Net Lease Advisor, was utilizing a 1031 exchange and could close in 30 days or less.
The Result – Seller Earns $300,000 on Original Investment in 2.5 Years & In Time to Start New Business
Thanks to Westwood’s team, with great satisfaction and very little effort, Kocur’s and Bundren’s client sold her Dollar General property in less than 30 days, earning $300,000 on the deal in just under two and a half years. She also met her timeline to start a new business venture.
Additionally, the new DG owner benefits from an absolute triple net, 12.5-year, corporate-guaranteed lease with extension options, consistent monthly income, and tax opportunities. It’s a win-win for both Westwood clients.
To Wrap it Up – With Westwood’s Help Dollar General Sells Fast at a Profit
Utilizing team Kocur’s and Bundren’s net-lease investment expertise, this NNN investor sold her Dollar General property fast and more than met her financial goals, freeing up capital for her next business venture.
If you are interested in learning more about NNN lease investments or would like to use the 1031 exchange to trade an underperforming property for one that offers nothing but benefits, contact Mike Kocur, 314.584.9857or Phil Bundren, 314.563.2203, for a free, no-obligation conversation.