PA Dollar General Sells for 7.35% Cap

Net Lease Press Releases

Calkain Sells Jonestown, PA Dollar General Net Lease for 7.35% Cap

Calkain Companies recently sold a Dollar General (NYSE: DG) net lease investment property located in Jonestown, PA. The transaction closed within the past 60 days and illustrated the compressing cap rates within the net lease segment of the market. The buyer was a privately, Pennsylvania-based net lease fund. The seller was a national real estate company, with a preferred development relationship with the tenant. The same seller has engaged Calkain to sell other stores throughout the mid-Atlantic states. The net lease Dollar General properties have been developed as part of Dollar General’s build-to-suit program. The stores have brand new 15 year triple net leases, which provide passive income for the new owner.

Calkain’s Andrew Fallon, Assistant Vice President, facilitated the transaction by providing exclusive representation to the seller. Investor demand for net lease Dollar General stores has significantly increased since S&P raised the company’s credit rating to investment grade BBB- in April 2012. The Jonestown store was highly sought after given its proximity and access to the I-78 corridor, the surrounding demographics, and the favorable lease structure. Fallon commented, “Cap rates for Dollar General have fallen below 7.50% and will likely trend to 7.25% based on a high demand and competitive bidding environment.” The combination of tenant credit and triple net lease terms provides a passive, bond-like fixed income investment, “The leases with Dollar General’s guaranty provide a strong income stream for the buyer, who will have limited to no management responsibilities.” The buyer financed the purchase using a regional bank.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net leased transactions. While licensed to conduct business in many states, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast, Northeast and Midwest. Additional information about the firm and listings may be found at www.calkain.com.

Net Lease Cap Rates Press Releases

Net Lease Press Releases 

Net lease cap rates fell by 25 basis points in 2011. The primary drivers of this trend are lack of product (especially high quality product) and an ease in lending conditions.


Construction of new net lease product continues to flow at a trickle while financing has become more available – with local and regional banks competing with insurance companies for credit tenant deals. Investors have shown the willingness and ability to invest but are hindered by lack of product to satiate their demand. This lack of supply and increase in demand has forced prices up and cap rates down – many would argue that 2012 promises to be a seller’s market in 2012.


 It is worth noting that these numbers illustrate the average trend in net lease cap rates and the net lease market itself is highly diverse depending upon tenant, lease terms and location. Though these factors have always been significant, their effects have recently compounded. Investors have shown a preference for high quality tenants in prime – urban and suburban – locations and are willing to pay some of the highest prices in recent years to obtain them. Cap rates in prime markets can be up 125bps lower than the charted averages of many segments. However, investors are increasingly showing interest in properties containing lower credited tenants or located in secondary locations – exchanging risk for higher returns. 


Net lease investments continue to gain traction as an alternative investment instrument for cash flow and yield investors.


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