America's NET LEASE CAP RATES CONTINUE FALLING
Cap rates on Walgreensand CVS properties remained flat with the quarter prior at 6.45 percent and 6.7
percent respectively, but cap rates on restaurants fell 25 basis points to 7.25
percent. Cap rates on McDonald’s restaurants in particular fell 20 basis points
to 4.8 percent, and cap rates on Dollar General stores fell 15 basis points, to
8.1 percent.
In addition, cap rates on
properties leased to banks compressed 35 basis points, to 5.5 percent. Still,
the cap rate compression on the most popular properties was below predictions.
Back in May, researchers with Marcus & Millichap Real Estate Investment Services
estimated that cap rates on dollar stores and drug stores would fall 30 basis
points each from the first to the second quarter of 2012, while cap rates on
quick service restaurants would fall 60 basis points.
However, few of those
properties are trading in the core markets. Finding a McDonald’s or a Walgreens
for sale in a primary market has “gotten tougher because there is not a lot of
new things coming out of the ground and partly that’s what pushed down cap
rates, as well as [the fact that] interest rates have gotten so low,” says
Jonathan W. Hipp, president and CEO of Calkain Cos., a Reston, Va.-based
brokerage and consulting firm specializing in the net lease sector
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