Marcus & Millichap to Market Net-Lease Portfolio

By Barbra Murray, Contributing Editor

Rite Aid location

Marcus & Millichap has been selected by a West Virginia-based development company to secure a buyer for a group of 17 net-lease properties. Consisting of drugstores and discount stores, the approximately 200,000-square-foot portfolio carries a price tag of roughly $77.3 million.

With locations in smaller towns in Ohio, New York and Pennsylvania, the collection of retail assets is headlined by Rite Aid, which occupies 14 of the single-tenant properties. Family Dollar’s name is on two of the properties and CVS rounds out the group with one store. “This portfolio presents investors with an almost entirely passive income stream as 12 of the 17 assets carry triple-net leases, and the remaining five properties hold double-net leases,” Gabriel Britti, first vice president of investments with Marcus & Millichap, said in a prepared statement.

Times are good in the net-lease universe

The net-lease subsector is thriving, and the numbers tell the story. In 2016, net-leased properties posted a year-over-year increase of 3.9 percent in the average asking rent, marking a pace more than double that of multi-tenant shopping centers, according to a Marcus & Millichap report. Additionally, asking rents are less than 2 percent below the pre-recession peak.

The strength of the net-lease market is such that developers can’t build fast enough. “Despite the upswing of net-leased deliveries, demand for spaces remains well ahead of supply growth, with net absorption exceeding development by an average of nearly 16 million square feet annually since 2010,” per the report.

Image courtesy of Matthew Masters, Archinect