Hanley Arranges Sale of Single-Tenant Walgreens in San Diego County

The 14,380-square-foot property in in Oceanside, Calif., traded for $7.4 million, marking only the second Walgreens in the county to change hands in the last 12 months.

Walgreens, Oceanside, Calif.
Walgreens, Oceanside, Calif.

Hanley Investment Group Real Estate Advisors has arranged the sale of a single-tenant absolute net-lease Walgreens in north San Diego County. The $7.4 million sale price represented a cap rate of 5 percent, and there are more than 15 years remaining on its primary lease with 10 five-year renewal option periods. Hanley Executive Vice President Kevin Fryman and President Ed Hanley represented the seller, a Beverly Hills, Calif.,-based private investor. Jason Flashman of Flashman Investment Group and Peak Commercial worked on behalf of the buyer, a private investor from Northridge, Calif. This is only the second Walgreens that has changed hands in San Diego County in the last 12 months, according to Hanley.

Located at 3507 Cannon Road in Oceanside, Calif., the 14,380-square-foot free-standing property with a drive-thru was built in 2007, on 1.6 acres within a former Ralphs-anchored shopping center, which includes national tenants such as McDonald’s, AutoZone and Pizza Hut.

“The market for Walgreens properties remains active as investors are attracted to investment-grade rated companies with long-term leases,” said Hanley in prepared remarks. The pharmacy store chain has a S&P Global credit rating of BBB.

Walgreens has a 10-year presence in the area, which has a population of more than 280,000 people within a 5-mile radius of the property. The average household income is more than $79,000 within a one-mile radius. The signalized intersection of Cannon Road and Melrose Drive has a daily traffic count of more than 42,000 cars. Two regional hospitals, Tri-City Medical Center and Scripps Coastal Medical Center, are less than 5 miles from Walgreens. Ocean Hills Country Club, a senior retirement community with more than 1,600 homes, is a five-minute drive away.  

“With continued volatility in investments such as stock and bonds, investors are looking to high-quality, single-tenant retail assets that require little to no maintenance,” said Hanley in a prepared statement. “A single-tenant investment such as Walgreens provides long-term cash flow, with relatively low risk. As investors continue to look for security, we expect that the demand for these high-quality, single-tenant investments will remain strong through 2017.”

Image courtesy of Hanley Investment Group