All Forum Posts by: John C

I'm reviewing a possible deal for a walgreens nnn lease. The cap rate is above 10%, however there is only one year left on the original lease. They have 80 yrs left during their option period, yet they have the right to terminate after this year and every subsequent five years. The agent states the owner has had some positive feedback regarding renewal of their first option (for the next five years). But their is no formal written commitment, it's only verbal. It seems very tempting, if they renew ... you've made a very good deal, if not (rare for walgreens to go dark) there is going to be some pain. What is my next step. Should I inquire about their store sales? Should I get a lawyer involved, perhaps he could gather some more information in terms of wether this particular walgreens intends to stay or not. Also, how common is it to renegotiate a long term deal with walgreens after their initial term. Thank you in advance for any input.

The walgreens was built in the 2000's.

There is a listing for a walgreens ground lease I noticed on the internet. The walgreens is on a hard corner in the outskirts of the city. The asking price is $2M with a 4% cap rate, basically it's only making $80K per year for quite a while. I don't understand, how did it come to this? How did walgreens work out a deal were they only pay 80K for years to come. And why would the owner allow this deal to happen?

Oh, I forgot to mention the car dealership is Tesla.

Thank you for the reply.

I will be putting some money down with a loan. I had a question about the terms of a commercial loan and the % you can put down. What would be the minimum I could put down to secure a commercial loan. I've seen terms of 25 to 30 years at 4.75% to 5% with 30% down (wondering if I could put down less).

All the properties are basically a 100% occupied. The shopping plaza I mentioned recently leased almost 20K sft to a gym. I am not sure if they have a co-tenant anchor clause or early termination rights. Its an up and coming fitness center in that particular area. They're paying about 10 psf which I assume is below market value. However, more concerning to me is the portion of taxes reimbursed, they are super high and that might be a deterrent for them or some future tenet.

The drugstore I mentioned is a Walgreens with 9 years left which is a plus, however the dollar store only has one year. Is it possible during the due diligence period to get a feel for how well the dollar store is doing and if they intend to stay.

thanks 

I am trying to decide on which one of a number of properties is a good deal with the highest return. They are retail. The first is a shopping plaza at $7M with a 9% cap rate, the largest shop has a 15 year lease, however the taxes for the property is very high. The second is a drugstore and dollar store at $8.5M and a 8% cap rate, the drugstore has 10 years left on its lease and the dollar store option is over next year. Lastly is a car dealership at 7M with a cap rate of 8%, however it is a 7 year lease with several 5 year options. If you need more detail, just let me know. I know I'm being vague, but right off the bat which one appears to be the best deal.

Thanks for the replies.

Joel, the building sits on less than an acre, so there doesn't appear to be any extra land for development or subdivision. I will say this, the property is in a good location with no new construction for miles. However, its and older building (1950's) and basically has no amenities for the tenets.

We just saw a property that interets us. However, the seller is being stubburn and not leaving much room for negotiation. The complex nets around 130 ... but he claims he just turn down an offer of 1.9M. That means he would have sold the property for around a 6.5 % cap rate. Yet, in this paritcular area properties are being sold for an 8 to 9% cap rate.

I am just wandering if we should walk away from this deal.

Need some help analyzing a financial statement for an apartment complex. Just wondering if capital improvements should be part of the expenses (i.e. should they be deducted from gross income to arrive at NOI). In this particular financial report, things like HVAC contractors, plumbing contractors, and roofing contractors are included in capital improvements and not deducted from gross income. Just wondering if this is the norm. Thank you.

Mike and Joel thanks for you help! :D

I just looked up the definition of a foreclosure in wikipedia and it basically states:

Foreclosure is the legal process by which the lender obtains a court ordered termination of a mortgagor's equitable right of redemption. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien".

According to this definition, the property appears to have been foreclosed on. The UCC form states that if the owner defaults on the property, the bank will repossess the property without any right of redemption.

They had listed this particular property on the sheriff's website and in the local paper. So it is scheduled for auction. However, the legal definition, as I see it, doesn't state that a property has to go to auction to be foreclosed on or repossessed. Am i wrong in my assumption.

Joel, it's good to hear someone has heard of pre-bids before auction. Could you elaborate as to how it works. Will they expect a ridiculously high bid, like something close to market value. Or will they just want to get it off their books and sell if at a deep discount. If the former, i'd rather bid for it at auction.

thanks.