Commercial Property being sold

[Joey Hicks]

Has anyone been noticing that Walgreens, Dollar General, Walmart Neighborhood Markets, and Long Horns are selling their buildings? They still have leases on the buildings but are selling them. Is this normal for companies to sell off their buildings or is this new with the Corona virus pandemic and companies are looking to raise capital?  

[Frank Chin]

@Joey Hicks

You have to have a little understanding of the dynamics of the business and the type of investments involved.

Its basically "sale and leaseback" arrangements where one party is the lessor, "fee simple" owner, one with the deed and another the lessee, with a long term NNN lease. meaning over 30 years. Usually the NNN lease will include option to buy. One you go into it, you stuck with it.

But the retail industry is going through a major transformation, with on line shopping. The lessee, like Sears can declare bankruptcy, and you'll be stuck with an empty property. I recently inherited some money, but holding off to see where the Pandemic will lead to. I feel a major downturn coming.  I see lots of free standing commercial stores in smaller towns, vacant for a long time. People prefer small strips it seems. My dad owns a small commercial property, a typical vacancy takes a year to fill.