
A Fresno pharmacy chain building has been sold for $3.18 million, representing one of the lowest capitalization rates for a building of its kind in the US. Image via Kidder Mathews
Written by The Business Journal Staff
A Fresno pharmacy chain building has been sold for $3.18 million, representing one of the lowest capitalization rates for a building of its kind in the US.
Seattle-based commercial real estate firm Kidder Mathews represented both the buyer and seller of the single-tenant, freestanding property at 3795 W. Shields Ave. just east of Brawley Avenue. It has been home to Rite Aid since 2000.
According to CoStar research, the sale price is among the lowest recorded cap rates nationally for a Rite Aid at 4.2%. The cap rate is a rate of return on an investment property based on the income (rent) the property is expected to generate, according to investopedia.com.
Executive Vice President Michael Walseth of the Kidder Mathews represented both the seller, a Newport Beach-based developer, and the buyer, a 1031 Exchange investor.
āThis highly successful sale is attributed to the propertyās recently recast 10-year lease with a rent level equating to a purchase price in the $2 million to $4 million range,ā stated Walseth. āThis range has been āred hotā among 1031 Exchange investors seeking strong intrinsic value and rent levels which are āright-sizedā based on the tenantās unit level business revenue. The 16,320-square-foot standalone property offers strong operational history, a signalized hard corner location, and dual drive-through functionality.ā
The building is situated on approximately 1.61 acres and is located west of Highway 99. The immediate trade area features numerous national and local retailers, including FreshCo Market, Dollar Tree, AutoZone, McDonaldās, Xpress Fitness and Dollar General.
āRite Aid continues to be a highly sought-after tenant among private NNN (triple-net lease) investors, typically trading at a relatively higher cap rate compared to other drug store tenants. Additionally, they stayed current through the pandemic and recently received a rating outlook from āstableā to āpositiveā as a result of addressing their liquidity and near-term debt maturities,ā adds Walseth. āBuildings occupied by Rite Aid will remain in high demand as investors are confident in their ability and intent to fulfill their lease obligations.ā