4.2% cap rate among lowest on record nationally for net leased Rite Aid property
Executive Vice President Michael Walseth of the Kidder Mathews net leased group has completed the sale of a single-tenant, freestanding retail property occupied by Rite Aid at 3795 West Shields Avenue in Fresno, California. Rite Aid (initially dba Thrifty) has been operating at this location since 2000. According to CoStar research, the sale price is among the lowest recorded cap rates nationally for a Rite Aid, at 4.2%.
“This highly successful sale is attributed to the property’s recently recast 10-year lease with a rent level equating to a purchase price in the $2 million to $4 million range,” says Walseth. “This range has been ‘red hot’ among 1031 Exchange investors seeking strong intrinsic value and rent levels which are ‘right-sized’ based on the tenant’s unit level business revenue. The 16,320-square-foot standalone property offers strong operational history, a signalized hard corner location, and dual drive-through functionality.”
Walseth represented both the seller, a Newport Beach-based developer, and the buyer, a 1031 Exchange investor.
“Rite Aid continues to be a highly sought-after tenant among private NNN investors, typically trading at a relatively higher cap rate compared to other drug store tenants. Additionally, they stayed current through the pandemic and recently received a rating outlook from ‘stable’ to ‘positive’ as a result of addressing their liquidity and near-term debt maturities,” adds Walseth. “Buildings occupied by Rite Aid will remain in high demand as investors are confident in their ability and intent to fulfill their lease obligations.”
The building is situated on approximately 1.61 acres and is located just east of Highway 99. The immediate trade area features numerous national and local retailers, including FreshCo Market, Dollar Tree, AutoZone, McDonald’s, Xpress Fitness, and Dollar General.
Michael Walseth has a 20-year industry track record representing more than $3.3 billion in transactions. Visit Kidder Mathews at https://kidder.com/services/net-lease-investments/ to learn more.
About Kidder Mathews
Kidder Mathews is the largest independent commercial real estate firm on the West Coast, with 900 real estate professionals and staff in 21 offices in Washington, Oregon, California, Nevada, and Arizona. Kidder Mathews offers a complete range of brokerage, appraisal, asset services, consulting, project & construction management, and debt & equity finance services for all property types. The firm performs $8 billion in transactions, manages over 70 million square feet of space, and conducts over 1,800 appraisals annually. For more information, visit kidder.com.
