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Market Intel, Forecasts & Strategies

Dollar Store Acquisition Strategies - How to Succeed in this Market

Nancy Miller

Yes! Interest rates have risen and make it harder to justify current-day cap rates. There’s hope! Here are a few strategies that will improve investor yield and enable you to get into the market. Read “How to Succeed in this Market!”
 
1. Shorter Term Leases: Consider established dollar stores with shorter remaining lease terms.
   WHY?
  • If they are the current SF prototype and have good “situs” (location, traffic counts, visibility, access, etc.), they are likely to renew.
  • Rent increases will come sooner than a new 10- or 15-year lease, which improves yield.
2. NN vs. NNN Leases: 
   WHY?
  • NN leases put more responsibility on the purchaser, BUT in return they get a higher cap rate.
  • NN leases often have rent increases sooner than the longer 15-year NNN leases, greatly improving the investor yield.
  • Newer NN leases with the Family Dollar and Dollar Tree stores have fewer landlord responsibilities and should be considered.
3. Consider small towns acquisitions: These are often great locations! 
    WHY?
  • There is little chance that a BIG BOX will land in a small town and these folks need toilet paper, milk and chips.
  • This is where the real bargains are in terms of higher cap rates, with both new construction and older stores.
  • Small town stores are the life blood of the area, often dubbed “The Baby Walmart.”
4. Are you an ALL-CASH buyer? 
  • As the saying goes, CASH IS KING! Investors with cash are in the driver’s seat as inventory continues to grow and can negotiate improved cap rates.
5. Portfolio Buyers: Buying multiple properties renders discounted cap rates.
  • Larger investors should consider buying a portfolio from the same developer who is concerned about short-term carrying costs since they are still paying for their construction loans until the property is sold.
6. Alternate Financing Strategies?
    TWO APPROACHES…
  • Assume the Existing Loan: Ask if the seller’s loan is assumable? Their interest rate will likely be lower than current rates. You will need to be prepared to bring cash to the transaction as a down payment.
  • Consider Seller Financing: If there is no loan on the property, consider making an offer with Seller Financing, offering a price close to the asking price with terms that make sense. Everyone wins!
 
After 20+ years as an investment sales broker AND living through the ups and downs of various cycles, I can confidently say, without hesitation that the dollar store space will provide long-term security and diversification for investors.
 
Below are some available properties that are worth considering.
 
Family Dollar– established and expanded inner city store with heavy traffic counts.
Louisville, KY - CLICK FOR BROCHURE LINK
 
Family Dollar.- dark Family Dollar with corporate guarantee with 7 years remaining
 
Family Dollar.- recent construction
Family Dollar.- recent construction
Crab Orchard, KY - CLICK FOR BROCHURE LINK
 
Family Dollar.- recent construction
Helenwood, TN - CLICK FOR BROCHURE LINK
 
Dollar General.- strong customer growth and annual sales
Phenix City, AL - CLICK FOR BROCHURE LINK
 
New Off-Market Dollar Generals
15-year NNN leases – inquire for details
 
New Upcoming Listings 
New Construction trophy location Dollar Tree in Savannah, GA – inquire for details
 
We would love to hear from you. Feel free to call and share YOUR STRATEGIES or let us know if we can give you a hand with the timing of your portfolio strategies.
Nancy Miller, CCIM, MBA
Partner, Bull Realty
President, Net Lease Investment Group
Nancy@BullRealty.com 
404-876-1640 x118

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