Dollar General?

Question

Anyone experienced in investing in Dollar General NNN leases? There seems to be an endless number of these listed with attractive cap rates. The business seems to be doing well so wondering why it seems like people are trying to get rid of them? Is the company de-investing in RE by sale/leaseback or are these coming from private investors? Curious if anyone has experience with these. 
-Thanks

Jon Klaus · Answer

My first question is what if things go wrong with the tenant (DG)?  How hard would it be to get a replacement tenant for the same rent?  In smaller towns, I think it would be very difficult.

Don Konipol · Answer

This same question was posted about 8 months ago.  Dollar General leases are typically for 10 years with four or five 5 year renewal options.  Problem for investor is if store is a success Dollar General will contract to build a much bigger store in the same area (sometimes next door) and investor is stuck with empty discount store building thats very difficult to lease with a much superior DG next door.  If store is not successful DG will not renew lease and investor will again be stuck with empty building.

Brandon Plombon · Answer

Our analysis was that after the 10 year NNN lease you'd have to put in a lot of capital and it wasn't worth it for us. Those DG buildings are built cheap and I don't like single tenant risk in a town of 2,000 people.

Bill Gulley · Answer

This is common in commercial retail properties. I'm familiar with the small town market, in general, and your long term exit strategy might be turning a building into a flea market. Bringing uneven cash flows back to present values to cover debt service and ROI can get to be a complicated issue. While national players will be more diversified, geographically and larger numbers, target payoffs should be withing the lease term, but not always possible with regional or national stores.
The only tool an individual investor has in considering one store is knowoing the market and if in a small town, the expected growth in the area (which can be zip!).  100X200' glass fronts make great flea markets!

Megra Spells · Answer

I am in South Carolina and am trying to get a grocery store/convenience store on a portion of my acreage.  I can't find a commercial realtor able to handle my acreage.  It's raw land fronting I-95.  I need a Dollar Mart. How can I find the correct poc in the organization?  Thank you.

Amos Ajo · Answer

The store sales are very strong at 1.5 million.

The property is just outside a major southern city.

So, my questions are the following:

Does anyone have experience directly with this situation?

Is there any way to get them to sign a lease extension?

This is an old question, but it is still relevant if you are planning to invest in Dollar General. The store sales are very strong may sound like positive but not until you answer the following questions:

When was the store built? What is the square footage of the store? What is the CAP Rate? What is the demographic profile of the location? What is the population trend of the location? What is the competition? What are the economic activities of the location? Is the store in a strategic area? Has the store been recently renovated by Dollar General? What is the cost of real estate in the location?

As an investor in Dollar General, these are just a partial list of questions that I must answer. If the store sales are strong in an area with strong population growth and with competition from Family Dollar or Dollar Tree and the store is old with less than 9100 Sq Feet, chances are very high for Dollar General to move into a newer store.

Eddie L. · Answer

@Alan Smith do you mind connecting me with your friend that builds Dollar General stores? I am considering building them and would like to gain some insight.

Julien Plouffe · Answer

I'm thinking of buying one of these as well in a major city. If there is a long enough lease, why not?

Joel Owens · Answer

On the potential tenants website there is usually a real estate department. Then there is generally a contact by region to contact for existing space or new development opportunities. Sometimes companies keep the main site consumer oriented and at the bottom real small is a corporate link to go to their headquarter website. There you can usually find the real estate contact. Some will deal with owners directly and other have tenant rep brokers they might direct you to FIRST to scrub the site and see if it is a possible match. If it looks promising they might contact you further. At the very least you might get feedback so you can see what they liked or didn't like about the site.

Account Closed · Answer

Dollar General - How to get a lease extension?

I have four years left on my Dollar General lease with no remaining options

I want to get a lease extension on this property and consider refinancing it or possibly selling it. However Dollar General has indicated that they will not consider a lease extension until 2016 at the earliest. From everything I've heard from others who own Dollar Generals this is their strategy to string you out and then finally at the last minute they will not renew the lease and will have built the new store.

The store sales are very strong at 1.5 million in 2013 and waiting on 2014 numbers.

The property is just outside a major southern city.

So my questions are the following:

Does anyone have experience directly with this situation?

Is there any way to get them to sign a lease extension?

I know they are big on building new stores that fit their prototypes. Is there any way to connect with or do a joint venture with one of their builders or are they just going to ACE me out and end up with an empty store???

Any assistance is appreciated

WL

Dollar General?

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