Branded tenant lease properties like Walgreens are attractive to commercial real estate investors for their stability, ready market, and minimal maintenance.
Amidst the stock market insecurities, branded properties like any available Walgreens for sale net lease offer can generate long-term income streams with low risk. Let’s see some of the reasons to consider purchasing a Walgreens property as a passive source of income.
Walgreens and NNN Leases
Walgreens falls among other brand names called “national credit tenants” with investment-grade ratings. Credit rating agencies (like Moody’s and Standard & Poor’s) rate them for their size and financial strength. Buyers would find a Walgreens Triple Net Real Estate property for sale. Such net leases usually involve single-tenant properties or extensive retail facilities with an anchor tenant on a NNN lease.
What Is a NNN Lease?
Each “N” in the triple net lease is an acronym for “net of” or “excluding” something else. That is, the rent which the tenant pays is “net of” three operating expenses, viz:
- Building insurance premiums;
- Maintenance and operating expenses on the facility; and
- Property taxes.
Advantages of Triple Net Leases
Triple net leases are sometimes called “coupon clipper” investments because of the additional expenses to base rent. Having said that, what are the benefits of investing in triple net leases?
- Triple net leases are a source of steady and reliable cash flow with longer NNN lease terms.
- Also, it’s easier to get financing for an NNN property, and with better terms.
- There’s minimal maintenance required from the landlord, leaving the property owner to focus on other investments.
- One highly recognized NNN brand in a multi-tenant facility can positively impact other occupants over heightened traffic.
Benefits of Purchasing a Walgreens Triple Net Real Estate
Walgreens Pharmacy is one of the most well-known credit tenants in the country. But what do you as a buyer stand to gain from purchasing a unit from them? We’ll consider these benefits in the succeeding lines.
Brand Resilience
Investors consider triple net leases as a defensive strategy to go through the lingering pandemic and the consequent economic downturn. Due to their long-standing stability and brand resilience through changing financial situations, many investors patronize Walgreens leases.
Useful amidst Economic Uncertainties
Another advantage of purchasing Walgreens commercial real estate is that they offer a predictable income stream. Even during the pandemic, and the surrounding economic recession, landlords and tenants are busy negotiating leases. Here’s a breakdown of what you stand to gain from a Walgreens investment in terms of stability.
- Investors can rest assured of a stable passive income stream. They’re sure of receiving a benchmark income regularly from their tenants.
- Strong tenants on a 15-year net lease, or longer
- Higher occupancy rate with low turnover for multi-tenant facilities
- Brands like Walgreens are usually sited at favorable locations to keep increasing value over a long time.
- Walgreens bears similarity with a bond investment since there are only minor operating requirements on them.
Financial Institutions or Lenders Favor Brand Tenant Leases like Walgreens
Apart from being investment-grade tenants, Walgreens commands financing from lenders because of their predictable income streams. Consequently, risk premiums on Walgreens leases would be narrower, and credit is more easily accessible. Even though lenders are getting more stringent, investors needing debt financing can find ample capital for solid brands like Walgreens.