The DC area’s largest net lease deal in years has closed, signaling the return of “set it and forget it” real estate. Washington Property Co. sold a combo Walgreens/PNC-leased property in Fairfax for $13.8M to a local investor.
Jeff Bogart at the Fairfax, VA, Walgreens and PNC Bank on April 18, 2011
You might recognize the above quote from rotisserie oven infomercials, but Calkain Cos.' Jeff Bogart (snapped yesterday in front of the property) told us it also applies to net lease properties. Because the tenant takes care of taxes, utilities, and upkeep, net lease investors don’t need to be real estate moguls. Plus, the tenants are usually Fortune 500 firms (translation: stable). As cap rates compressed, Jeff says, sales increased, but the market has become a self-fulfilling prophecy as would-be sellers wait to see if there’s “more room in the inn” (more cap rate compression, which means higher returns on property sales). Meanwhile, buyers are numerous; if he had more listings, he says, he could sell them immediately. The other benefit for this property’s buyer: The 20-year lease involves 10% rent increases every five years; Walgreens leases usually have one 10% bump in the eleventh year.
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