American Realty Capital Closes Purchase of 21 Net-Leased Properties
By Barbra Murray, Contributing Editor
American Realty Capital Properties Inc. has added 21 single-tenant properties to its rapidly growing portfolio of net-leased assets. The company shelled out $26.2 million for the freestanding buildings, which account for an aggregate 300,000 square feet of office and retail space across 10 states.
Talk about creditworthy tenants; this group has it in spades. Four of the properties are office destinations occupied by the federal government. The U.S. Fish & Wildlife Service makes its home in a building in Gloucester, Va., while the U.S. Forest Service maintains digs in a structure in Warren, Pa. Additionally, the U.S. Army Corps of Engineers leases a property in Mobile, Ala., and the U.S. Drug Enforcement Administration occupies a building in Plattsburgh, N.Y. The remaining properties in ARCP’s newly acquired group of assets include a single Tractor Supply store in Rio Grande, Texas, and 16 Dollar General stores bought from a partnership involving Grisham Land & Cattle L.L.C.
ARCP relied on proceeds from its recent underwritten public offering to finance the purchases. The company will utilize more funds from the offering to snap up a 22nd asset.
On the road to qualifying as a REIT, ARCP focuses on the ownership and acquisition of well-tenanted net-leased properties, and its new assets fit the bill. However, securing such properties is no simple accomplishment, as the competition for such assets is steep, making large group purchases increasingly challenging. “We expect 2012 to be a year in which demand for single-tenant investment will remain high,” commercial real estate services firm Cassidy Turley notes in a report. “The only question is whether a lack of available properties hampers sale activity.”
Obtaining multiple single-tenant net-leased assets is difficult but not impossible, as evidenced by a handful of recent transactions. Earlier this month a group of nine Walgreens stores on the East Coast totaling 117,600 square feet traded for $68.7 million. Additionally, in May, ARCP became the owner of six built-to-suit FedEx Freight distribution facilities, courtesy of a $12.2 million transaction. And even single-property purchases can be hard to come by, not to mention pricey. In May, a 16,000-square-foot Walgreens drugstore in Las Vegas sold for $27.8 million. With a price tag of $1,736 per square foot, the retail property became the most valuable single-tenant drugstore ever to trade in the U.S.