Harrison Net Lease Capital

New Listing: 9Yr | 6.50% Cap | Burger King on the Space Coast (FL)

1455 N Courtenay Pkwy, Merritt Island, FL 32953 | Crexi.com Retail property for sale at 1455 N Courtenay Pkwy, Merritt Island, FL 32953. Visit Crexi.com to read property details & contact the listing broker.

-Rite Aid Corp. is reportedly gearing up for a Chapter 11 bankruptcy filing in response to lawsuits accusing the drugstore chain of contributing to the opioid crisis.

-The bankruptcy move is aimed at addressing the company's substantial $3.3 billion debt load and its legal challenges related to the alleged oversupply of prescription painkillers.

-Rite Aid, a regional player with over 2,330 stores across 17 U.S. states, faces lawsuits for its purported role in fueling the opioid epidemic, joining other pharmacy chains in the same predicament.

-Amidst a backdrop of legal actions against various industry players, Rite Aid has not yet reached a nationwide settlement, unlike others who have collectively paid over $50 billion to resolve similar claims.

-This development raises questions for single tenant net lease investors in the commercial real estate sector, particularly those with properties leased to Rite Aid. How might this impending bankruptcy and legal turmoil impact the stability and future prospects of their real estate investments?

Rite Aid Preparing to File for Bankruptcy Rite Aid Corp. is preparing to file for bankruptcy in coming weeks to address lawsuits the drugstore chain is facing over its alleged role in the sale of opioids, The Wall Street Journal reported Friday.

My clients who own Fast Food single tenant net lease properties ask me all the time: "What do you think these (stores) will look like in 5,10,20 years?"

I never pretend to have a crystal ball, so my professional opinion is that this new design from Chick-fil-a, as well as the Taco Bell Defy model in Brooklyn Park, MN, provide us with some clarity to that question.

You can imagine:
-Pulling up in your self-driving car
-Digital AI-avatars take your order at the kiosk
-Robots cook and fulfill your order

The implications all these factors have on the underlying real estate are immense.

See Chick-fil-A's wild new restaurant design with a drive-thru that runs through the middle of the building One concept has four drive-thru lanes that flow below an elevated building with a large kitchen. A walk-up only store opens in 2024 in New York City.

New Taco Bell listing in Nixa, MO (Springfield MSA) has the most attractive, percentage rent NNN lease available on the market.

Highlights:

-13+ years remaining on NNN lease with no LL responsibilities
-Rent has increased by an avg of 8% ANNUALLY the past 3 years
-Sales are 30%+ greater than the Taco Bell national avg
-Sales have increased by 82% over the previous 13 years
-No tenant renewal options provides maximum LL flexibility at end of lease (very rare)
-Tenant is 3rd largest Taco Bell franchisee in the world
-Taco Bell has been at this location for 29+ years
-Nixa is

507 W Mt Vernon St, Nixa, MO 65714 - Retail Property for Sale - Top Performing Taco Bell | % Rent Retail property for sale at 507 W Mt Vernon St, Nixa, MO 65714. Visit Crexi.com to read property details & contact the listing broker.

A few takeaways:

-Walgreens Boots Alliance is closing 150 Walgreens stores in the US and 300 Boots stores in the UK as part of cost-cutting efforts, aiming to save $800M in 2024.

-The company reported a significant decline in net earnings in the third quarter due to lower operating income, primarily attributed to reduced consumer spending and decreased demand for COVID-19 services.

-Walgreens administered 83% fewer COVID-19 vaccines and tests compared to the previous year, reflecting a decrease in patient willingness to vaccinate.

-Despite an increase in top-line revenue, the US Healthcare segment reported an operating loss of $172M, primarily due to slower-than-expected profitability from recent acquisitions and expansion efforts.

Walgreens to Close 150 Stores | GlobeSt The retailer says the vaccine business is disappearing and that U.S. Healthcare unit not profitable.

"The fast-food giant estimates that around 300-400 U.S. restaurants will close in 2023."

The issues are not new and they run deep. Burger King is just one example in the QSR (fast food) space. We will see more of this with other brands moving forward who will shutter under performing stores as they restructure and reposition themselves to remain competitive.

Burger King is Cracking Down on Underperforming Franchisees | QSR magazine There are several components to a franchisor-franchisee relationship, but RBI chairman Patrick Doyle described it in the simplest of terms—operators are the customer. The company sells a business model and works to increase the average profitability while the franchisees aim to be better than aver...

More consolidation in the convenience store sector - this time between Maverik and K*m & Go.

Maverik Acquires K*m & Go in Convenience Store Consolidation | GlobeSt Merged chains will create 800-outlet player in Rockies, Midwest.

The coffee industry's growth continues to make waves, thanks to rising demand for specialty coffee and its appeal to younger generations. This boom offers enticing prospects for single tenant net lease investors seeking a resilient sector within the net lease space.

Starbucks and the Coffee Sector are Buzzing | QSR magazine The category is proving more than resilient to COVID's challenges.

This is an interesting and well-written article highlighting some of the factors currently at play in the macro economy which are having a direct impact on the Commercial Real Estate (CRE) market. While concerns in the banking world, particularly among Regionals, have been widely reported, the looming question is how this will affect the wall of CRE loan maturities coming due in the next 12-36 months.

The Office sector is also facing a rapid decline due to the work-from-home trend, which has significantly altered our way of life and the way we interact with CRE across all sectors. But what about other asset classes in the market? How are they positioned to withstand this cycle?

The Credit Crunch That’s Strangling Commercial Real Estate The credit crunch will deepen and extend value declines and losses in commercial real estate. Click here to read my thoughts.