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| Rite Aid Pharmacy 28995 Newport Road, Menifee CA |
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| Kevin Fryman |
CORONA DEL MAR, CA -
Hanley Investment Group Real Estate Advisors, a nationally-recognized real
estate brokerage and advisory firm specializing in retail property sales,
arranged the sale of a new single-tenant absolute net-lease Rite Aid property
located at 28995 Newport Road in Menifee, Calif. The purchase price was $9
million, which represented a cap rate of 4.72 percent.
Hanley Investment Group
Executive Vice President Kevin Fryman
represented the seller, Parkcrest Construction Inc. A Real Estate Development
Company of Ontario, Calif. The buyer, a private investor, was represented by
First Vice President Investments Ron
Duong of Marcus & Millichap of Newport Beach, Calif.
“The sale of the Rite Aid
represents the lowest cap rate for a single-tenant Rite Aid in the Inland
Empire ever,” said Fryman. “It was also one of the lowest cap rates for a
fee-simple Rite Aid nationwide.”
Completed in late 2016,
the new 17,185-square-foot freestanding building with a drive-thru is situated
on a 1.63-acre parcel of land at the southwest corner of Newport Road and
Menifee Road in Menifee. Rite Aid has nearly 20 years remaining on the initial
term with increases every 10 years.
“Currently, there are no
competing drug stores in the immediate trade area,” said Fryman. “Rite Aid, the
third-largest U.S. drug store chain, has been seeking the Federal Trade
Commission approval of their merger with Walgreens since October 2015. To
obtain approval, there have been plans to divest between 1,000 to 1,200 stores
to Fred’s after they were denied in an earlier plan to divest 865 stores.”
According to a report in
the New York Post on February 16, 2017, the companies may be close to winning
Federal Trade Commission approval with a revised plan, possibly in the next two
to four weeks, says Fryman. Combined, Walgreens/Rite Aid would have a reported
46% US market share.
“We commenced marketing
during construction, and received multiple offers within a couple of weeks,”
said Fryman. “We were also able to overcome the issues of rising interest rates
during the purchase agreement negotiation and the breakdown of the Rite
Aid/Walgreens merger during escrow.
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| Ron Duong |
"The buyer was hopeful that the merger would
eventually go through. This transaction is a testimony to the demand for
well-located single-tenant investments.”
Newport Road is the
primary retail thoroughfare in the Temecula Valley, connecting Interstate 15 in
Lake Elsinore to Interstate 215 in Menifee and the surrounding cities. National
retailers along Newport Road include Super Target, Lowe’s, Ralphs, Best Buy,
BevMo!, Dollar Tree, Kohl’s, Living Spaces, Michaels, Petco, Ross Dress for
Less, Staples and T.J. Maxx.
Menifee is the second
fastest growing city in Southwest Riverside County. Fryman reports that 115
percent population growth is expected within the next two years. The trade area
has affluent demographics with $73,000 average household income within three
miles of the property. The property also benefits from the 15,000+ students
that attend Mount San Jacinto Community College one mile from Rite Aid
property.
“We expect that investors
will continue to seek out well-located single-tenant retail investments as the
flight to quality increases, which strengthens the compression of cap rates,
especially for assets like Rite Aid,” Fryman said.
For a
complete copy of the company’s news release, please contact:
Anne Monaghan
MONAGHAN COMMUNICATIONS,
INC.
anne@MonaghanPR.com
830.997.0963
www.hanleyinvestment.com
