Friday, October 30, 2009

Top 6 Properties Among 339 10-16-09

  1. Romano’s Macaroni Grill in Fort Worth, TX: 7888 SF attractive restaurant built in 1999 on 1.88 acres of land conveniently located along I-35. New 20-years absolute NNN corp lease. NOI $203K/yr. $2.389M. 8.5% Cap.
  2. Jack in the Box in San Jacinto, CA: 2850 SF free standing building constructed in 1993 on .50 acre lot adjacent to Walgreen’s at strong retail corridor. Long absolute NNN corp lease wit CPI rent increases. NOI $114K/yr. $1.836M. 6.25% Cap.
  3. Free-standing retail building in San Diego, CA: 7900 SF retail building constructed in 1990 on .69 acre lot across from Rite Aid at signalized intersection. 100% NNN leased by PowerHouse Gym with 300 locations worldwide. NOI $186K/yr. $2.350M. 8% Cap.
  4. KinderCare Learning Center in Laveen, AZ: 10,145 SF recently constructed day care center on over 1 acre outparcel to Safeway anchored center in booming (595.58%) Phoenix suburbs. 15 yrs absolute NNN corp lease. NOI $232K/yr. $3.106M. 7.5% Cap.
  5. Strip Center in Sacramento, CA: 9330 SF retail center with excellent visibility along busy thoroughfare near Florin Mall. 100% NNN leased by 5 tenants: ICI Paint, FL Laundromat, Vac & Sew, Paris Salon and T-Mobil. NOI $126K/yr. $2M. 6.3% Cap. Price reduced from $2.5M. to $2M.
  6. Strip Center in Green Bay, WI: 8253 SF recently renovated strip center on .79 acre lot in close proximity to Lambeau Field/Bay Park Square Mall. 100% NNN leased. NOI $96K/yr. $995M. 9.68% Cap. Perfect for 1st time investor.

    © Copyright Transmercial 2009. All rights reserved.

Thursday, October 29, 2009

Top 8 Properties 10-15-09

  1. Walgreens Pharmacy in Winter Park, FL: recently constructed 13,739 SF pharmacy on 1.48 acres of land at signalized intersection in Orlando metro. Long NNN lease. NOI $556K/yr. $7.673M. 7.25% Cap.
  2. Retail Center in Tucson, AZ: 8000 SF eye-catching retail center constructed in 2008 on .89 acre lot fully leased: Einstein Bagels, Cici’s Pizza & Foothills Barbers. NOI $216K/yr. $1.950M. 11.10% Cap. This is a court-ordered bankruptcy sale.
  3. Strip Center in Fort Worth, TX: 9244 SF attractive strip center shadow-anchored by well performing Albertson’s grocery store with excellent tenant mix. 100% NNN leased. NOI $158K/yr. $1.763M. 9% Cap.
  4. Apartments in San Jose, CA: well-located 16-units apartment complex along Capitol Expressway near Hwy-101/680/280. NOI $129K/yr. $1.995M. 6.48% Cap.
  5. Shopping Center in Roy, UT: 30,860 SF well-kept shopping center constructed in 2000 on 2.85 acres parcel in Salt Lake City metro. Fully leased by strong national tenants. NOI $356K/yr. $4.250M. 8.39% Cap.
  6. Shopping Center in Jonesboro, GA: 19,600 SF shopping center built in 1999 on 2.2 acres of land with great visibility near I-75/285. 82% leased. NOI $219K/yr. $2M. 10.97% Cap. Upside potential when fully leased.
  7. Neighborhood Center in Jacksonville, FL: 32,976 SF attractive neighborhood center at signalized intersection with good national/local and regional tenants. NOI $369K/yr. $3.875M. 9.55% Cap.
  8. Medical Plaza in Northridge, CA: 44,200 SF Class-A multi-tenant medical plaza on 1.69 acres of land conveniently located near major freeways. 100% leased. NOI $795K/yr. $10.650M. 7.47% Cap. Buyer to assume $5.950M at 5.65% interest rate.

    © Copyright Transmercial 2009. All rights reserved.

Wednesday, October 28, 2009

Top 8 Properties Amoing 330 10-14-09

  1. Advance Auto Parts in Parker, CO: 7000 SF single tenant retail building constructed in 2004 on 1 acre lot at busy intersection in fast growing (83%) & well off (AHI $101K/yr) Denver metro. Long NNN corp lease. NOI $129K/yr. $1.664M. 7.75% Cap.
  2. Tuffy Auto in Omaha, NE: 3900 SF recently constructed Tuffy Auto retail building adjacent to newly constructed Super Target, OfficeMax, Hobby Lobby and Sport Authority. New 20-years NNN corp lease with 7.3% rent increase in 2013. NOI $111K/yr. $1.3669M. 8.15% Cap.
  3. Retail Building in Jacksonville, FL: 10,452 SF two-tenant retail building constructed in 1994 on over 1 acre lot across from Regency Square Mall. 100% NNN leased. NOI $215K/yr. $2.395M. 9% Cap.
  4. Shopping Center in Suwannee, GA: 33,500 SF beautiful shopping center on 4.62 acres of land with excellent visibility in fast growing Atlanta suburbs. 100% NNN leased. NOI $311K/yr. $3.992M. 7.81% Cap.
  5. 2-Stories Office Building in Matteson, IL: 22,524 SF mature office building on 2.45 acres of land conveniently located at active thoroughfare. 84% leased. NOI $128K/yr. $1.350M. 9.55% cap. Upside potential when fully leased.
  6. Strip Center in Raleigh, NC: 13,800 SF eye-catching strip center built in 1996 on 1.12 acres of parcel near US-1. 100% NNN leased. NOI $138K/yr. $1.583M. 8.75% Cap.
  7. Retail Center in Wake Forest, NC: 11,454 SF multi-tenant retail building on over one acre lot adjacent to The Market of Wake Forest center anchored by Food Lion. 100% NNN leased. NOI $152K/yr. $1.607M. 9.5% Cap.
  8. Walgreens Pharmacy in West Palm Beach, FL: 19,020 SF beautiful Walgreens retail building at active intersection with 70,000 VPD in densely populated area. 100% leased. NOI $428K/yr. $4.950M. 8.57% Cap.

    © copyright Transmercial 2009. All rights reserved.

Tuesday, October 27, 2009

Top 8 Properties Of 10-13-09

  1. Single Tenant Retail in Fairfield, CA: 43,896 SF single tenant big box on 4 acres of land in Northern CA. 100% absolute NNN leased till 2028 by Orchard Hardware Supply. NOI $724K/yr with strong 11% rent bump in 2013 and every 5 yrs thereafter. $8.52M. 8.5% cap.
  2. Dialysis Center in Chicago, IL: brand new 8000 SF single-tenant medical building in a densely-populated city with over 750K residents within 5 miles ring. 10 yrs NNN lease guaranteed by DaVita Incorporated (NYSE: DVA). NOI $141K/yr. with 2% annual rent bump. $1.83M. 7.75% cap. Recession resistant tenant.
  3. Quality Inn and Suites in Carlsbad, CA: 124 unit motel built in 1986 on 2.59 acres parcel with ocean view in a affluent coastal town (AHI $140K/yr) in San Diego suburbs. Easy access to I-5 and walking distance to the beach. 68% avg occupancy and $92/night. NOI $826K/yr. $11.8M. 7% cap.
  4. Burger King in Grand Island, NY: 5850 SF restaurant remodeled in 2008, on 3.15 acres lot. Just off I-190 south of Niagara Falls. New 20 yrs NNN lease by Carrols Corporation, Burger King's largest franchisee. NOI $92K/yr. $1.15M. 8% cap.
  5. Apartment in San Leandro, CA: 9-unit 3-story apartment on ¼ acres in a high-income San Fran Bay Area with AHI over $81K/yr. 100% occupied. Gross income $131K/yr. NOI $92K/yr. $1.3M. 7.08% cap.
  6. Medical Office building in Lakewood, WA: 10,400 SF 3-building office complex on 1.2 acres lot in Tacoma metro. 80% leased. NOI $108K/yr. $1.4M. 7.75% cap.
  7. Goddard Preschool in Charlotte, NC: 8000 SF franchised day care center built in 2000 on over 1 acre parcel. 10 yrs NN lease. NOI $140K/yr. $1.399M. 10% cap.
  8. Walgreens in Hermitage, TN: 13,905 SF drug store on 1.67 acres lot in Nashville metro. 20 yrs NNN lease with 9 yrs remaining. NOI $260K/yr. $2.971M. 8.75% cap.

© Copyright Transmercial 2009. All rights reserved.

Monday, October 26, 2009

Top 7 Properties Among 350+ 10-12-09

NOI: Net Oper income
AHI: Avg Household income

  1. Retail center in Lake Elsinore, CA: 3876 SF retail center built in 2008 on .8 ac outparcel to a shopping center anchored by Home Depot, Walgreens, Petco, 99 Cents Only, Office Max and Big 5 Sporting Goods. Just off I-15 in a high-growth town. 100% NNN leased by 2 brand name tenants: Radio Shack and Wienerschnitzel. NOI $137K/yr. $1.777M. 7.75% cap.
  2. Del Taco restaurant in Layton, UT: 3181 SF brand new franchised restaurant in a prime commercial corridor just off I-15 in Salt Lake City metro. 20 yrs NNN lease by a top Del Taco franchisee. NOI $130K/yr. $1.625M. 8% cap.
  3. Walgreens in Birmingham, AL: 13,905 SF drug store on 1.17 acres corner parcel. 20 yrs NN lease with 9.5 yrs remaining. NOI $289K/yr. $3.306M. 8.75% cap.
  4. Panda Express restaurant in Hayward, CA: 2406 SF restaurant built in 2002 on pad to Target just off I-880 in a city with AHI over $91K/yr. 100% NNN lease with 6 yrs remaining. NOI $104K/yr with 10% rent bump in 2010. $1.438M. 7.25% cap now and 7.97% cap in 2010.
  5. Ryan’s restaurant in Spartanburg, SC: 10,902 SF restaurant on 1,9 acres outparcel to a Wal-mart supercenter and close to Westgate Mall. Just off I-26. Store with strong revenue of over $2.3M/yr. Long term NNN corp lease. NOI $205K/yr. $2.05M. 10% cap.
  6. Shopping Center in Boynton Beach, FL: 13,041 SF strip mall on 1.2 acres lot on a busy artery just .3 mile from Boynton Beach Mall in high income area North of Fort Lauderdale. Excellent visibility. 90% leased with just 1 vacant space. NOI $306K/yr. $3.4M. 9% cap.
  7. Macaroni Grill restaurant in Burlington, MA: 7956 SF restaurant on 2.66 acres parcel across from 1.246 Million SF 170-shop Burlington Mall in an affluent Boston suburbs with AHI over $117K/yr. NOI $268K/yr. Long term absolute NNN corp lease. NOI $268K/yr. $3.352M. 8% cap.

    © Transmercial 2009. All rights reserved.

Walgreens, CVS or Rite-Aid: Which Tenant Is Best in 2010?

There are 3 major drugstore chains in the US: Walgreens, CVS, and Rite Aid. The table below ranks the companies by market capitalization and sales revenue as of September 2009:

  1. Walgreens ranks #1 with market cap of $34.26 Billion, $62.23 Billion in revenue, and S&P rating of A+. According to Walgreens, 75% US population lives within 3 miles from its stores. On Oct 1, 2009, Walgreens opened its 7000-th store in Brooklyn, New York.
  2. CVS ranks #2 with market cap of $52 Billion, $93.27 Billion in revenue (CVS revenue alone is less than Walgreens if revenue from its Caremark group is taken out), and S&P rating of BBB+. CVS opened its 7000-th store in Little Canada, Minnesota on October 5, 2009.
  3. Rite Aid ranks #3 with market cap of $1.87 Billion, $26.21 Billion in revenue, 4901 stores and S&P rating of B-.

Investors purchase properties occupied by these drugstore chains for the following reasons:

  1. The drugstore business is very recession-insensitive. People need medicine when they are sick, regardless of the state of the economy. Both rich and poor people in the US have access to medicine. Some even argue that low-income people use more medicine due to free or low-cost drugs offered by government-assisted programs. So the tenants should do well during tough time and have money to pay rent to landlords.
  2. The drugstore business has a good prospect in the US:
    • People are living longer and need more medicine to sustain longevity, e.g. Actonel for osteoporosis, Aricept for Alzheimer’s symptoms. Older people tend to use more medicine than younger ones. As the 78 million baby boomers are getting closer to retiring age starting from 2008, the drugstore chains anticipate the demand for medicine to increase in next 20 years.
    • The drug market continues to expand as the US population will continue to grow.
    • There are new drugs to treat previously untreatable illnesses, and new diseases, e.g. Viagra for men’s unhappiness, Zoloft for depression, Avastin for colon cancer, Herceptin for breast cancer, Nicotine patches for smokers to kick the habit, Tamiflu for a potential bird flu pandemic, vaccine for swine (H1N1) flu pandemic, Tekturna/Rasilez for hypertension and various new drugs for AIDS and Attention Deficit Disorder (ADD). The new medicines are very expensive, e.g. a year’s supply of Avastin costs about $55,000. Eli Lilly has sold about $4.8 billion of Zyprexa in 2007 for schizophrenia and yet most people have never heard of this medicine.
    • There are existing drugs now approved to treat new illnesses and thus increase their sales revenue. For example, Lyrica was originally intended to treat pain caused by nerve damage in people with diabetes. It is now approved by FDA to treat Fibromyalgia which affects 5.8 million Americans per WebMD.
    • Big advances in genetics, biology and stem cells research are expected to produce a new class of drugs to treat diabetes, Parkinson’s and various rare genetic disorders. For example the new drug Ilaris from Novartis targets genetic causes of an inherited disorder that there are only 7000 known cases worldwide. However, Novartis hopes to gradually broaden its drugs to a blockbuster drug to more common disorders caused by similar genetics.
    • Technology and modern life introduce and require new products, e.g. pregnancy test kits, Lamisil for stronger clearer toe nails, Latisse for longer thicker eyelashes, Premarin for menopausal symptoms, diabetic monitors, electronic toothbrushes, contact lenses, lenses cleaners, diet pills, vitamins, birth-control pills, IUDs, nutrition supplements and Cholesterol-lowering pills (Americans spent nearly $26B in 2006 on Cholesterol medications alone per IMS Health, a Connecticut-based consulting company that monitors pharmaceutical sales.) There are also more surgeries: C-sections, Kidney transplants, open-heart triple by-pass, and breast augmentations. More surgeries mean more medicines are needed such as Vicodin for pain management and Warfarin to prevent blood clots in surgeries.
    • Before the customers can get to the medicine aisles or pharmacy counters, they have to pass by chocolates, sodas, digital cameras, watches, toys, dolls, beers and wines, cosmetics, video games, flowers, fragrances, and greeting cards. They hope you use the one-hour photos services and exchange your liquid propane tanks there. The stores also carry seasonal items, e.g. Halloween costumes, and “As Seen on TV” merchandise, e.g. Shamwow. As a result, customers buy more than their prescriptions and medicine in these drugstores. Rite Aid sells more 28,000 non-pharmacy items in its stores while Walgreens has 22,000 different items on store shelves. CVS reported that non-pharmacy sales represented 30% of the company’s total sales in January of 2007. The figure for Walgreens is 34% and 37% for Rite Aid. Many pharmacy locations are in effect convenience stores especially ones that are in residential or rural areas. During the recession, sales of these items are down as customers buy what they need and not what they want. Walgreens tries to reduce the number of items by 4000. It also introduces its own private label which has higher profit margins.
    • There are more and more generic medications on the market as a number of enormously popular brand-name blockbusters will lose their 20-year long patents, e.g. Lipitor (best selling drug in the world to lower cholesterol) in 2010, Actos (for diabetes) in 2011, Advair (best selling drug for asthma) in 2011), Viagra (you know what it’s for) in 2012. Drugstores prefer to sell generic drugs to customers due to higher profit margins than the brand-name medications.
  3. These companies sign very long-term, NNN leases, guaranteed by their corporate assets. This makes the investment in the underlying property fairly low risk, especially for Walgreens with an A+ S&P rating. In fact, these properties are sometimes referred to as investment-grade properties. Once the drugstore chains sign the lease, they pay the rent promptly and timely. This author is not aware of any properties leased by one of these drugstore chains in which the tenants failed to pay rents. Even when the stores are closed due to weak sales (Walgreens closed 119 stores in 2007), these companies may sublease the properties to other companies, e.g. Advance Auto Parts and continue to pay rents on the master leases.
  4. Investment Risks
    Although the pharmacy business in general is recession-insensitive, there are risks involved in your investment:
    1) The main downside about investing in pharmacies is there is little or no rent bump for a long time, e.g. 20-50 years, especially for Walgreens. So the rent is effectively reduced after inflation is factored in. This is one of the main reasons these properties do not appeal to younger investors.
    2) The 3 drugstore chains now have a new formidable competitor, Wal-mart. Wal-mart sells prescription drugs in more than 4000 Wal-mart, Sam’s Club and Neighborhood Market stores in 49 states. The retail giant is known for launching in 2006 a highly-publicized $4 generic prescription drug program which now sells 350 generic medications for a 30-day supply. The actual number of medications is less as the medications with different strengths are counted as different medications. For example, Metformin 500 mg, 850 mg, and 1000 mg are counted as 3 medications. Wal-mart probably makes very little profits on these medications if any. However, the marketing campaign generates a lot of publicity for Wal-mart. Wal-mart hopes to draw customers to its stores with other prescriptions where it has higher profit margins. In an unscientific survey with just one brand-name prescription of Lyrica, this author finds the lowest price at Costco, the highest price at Walgreens and Wal-mart at the middle. Other drug chains try to counter Wal-mart in different ways. Target now offers the same 350 generic medications for $4 for a 30-day supply. Walgreens has a Prescription drugs club with membership fee which offers 1400 generic medications for as little as $1/week. CVS says it will match any offers from its competitors.
    3) Chief Business Correspondent Rick Newman from US World & News Report predicted that Rite Aid might not survive in 2009. It looks like he might be wrong. The study by Audit Integrity gave Rite Aid about a 10.5 percent chance of filing for bankruptcy in 2010. However, its stocks seem to perform quite well in the second half of 2009. For the second quarter ended in August 2009, Rite Aid narrowed its loss to $116 million, compared with a loss of $222 million last year.
    4) Drugs are also sold in thousands of supermarkets, Target, and Costco.
    5) Many leases in areas with hurricanes and tornados are NNN leases with the exception of roof and structure. So if the roof is damaged, you will have to pay for the expenses.
    6) The tenant may move to a new location down the road or across the street when the lease expires. This risk is high when the property is located in small town where there is low barrier for entry, i.e. lots of vacant & developable land.
    7) The tenant may ask for rent concession to improve its bottom line. The possibility is higher if the tenant is Rite Aid and if the store has low sales revenue and/or higher than market rent.

Among 3 drugstore chains, Walgreens and CVS pharmacies in general have the best locations—at major intersections while Rite Aid has less than premium locations. They all try to fill the prescriptions with generic medications which have higher profit margins.

1) Walgreens: the company was founded in 1901 by Charles Walgreen, Sr. in Chicago. While the company has existed for more than 100 years, most stores are only 5-10 years old. This is the best managed company among the three drugstore chains and also among the most admired public companies in the US. The company has been run by executives with proven track records and hires the top graduates from universities. Due to its superior financial strength--S&P A+ rating-- and premium irreplaceable locations, properties with leases from Walgreens get the highest price per square foot and/or the lowest cap rate among the 3 drugstore chains. In addition, Walgreens gets flat rent or very low rent increase for 20 to 60 years. The cap rate is often in the low 6% to 7.5% range in 2009. Investors who buy Walgreens tend to be more mature, i.e. closer to retirement age. They are looking for a safe investment where it’s more important to get the rent check than to get appreciation. They often compare the returns on their Walgreens investment with the lower returns from US treasury bonds or Certificate of Deposits from banks. Walgreens opened many new stores in 2008 and 2009 and thus you see many new Walgreens stores for sale. It will slow down this expansion in 2010 and focus on renovation of existing stores instead.

2) CVS Pharmacy: CVS Corporation was founded in 1963 in Lowell, MA by Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland. The name CVS stands for “Consumer Value Stores”. As of 2009, CVS has about 6300 stores in the US, mostly through acquisitions. In 2004, CVS bought 1,200 Eckerd Drugstores mostly in Texas and Florida. In 2006, CVS bought 700 Savon and Osco drugstores mostly in Southern California. And in 2008 CVS acquired 521 Longs Drugs stores in California, Hawaii, Nevada and Arizona for $2.9B dollars. The acquisition of Long Drugs appears to be a good one as it CVS does not have any stores in Northern CA and Arizona. Besides, the price also included real estate. It is also bought Caremark, the largest pharmaceutical services company and changed the corporation name to CVS Caremark. When CVS bought 1,200 Eckerd stores, it formed a single-entity LLC (Limited Liability Company) to own each Eckerd store. Each LLC signs the lease with the property owner. In the event of a default, the owner can only legally go after the assets of the LLC and not from any other CVS-owned assets. Although the owner loses the guaranty security from CVS corporate assets, this author is not aware of any incident where CVS closes a store and does not pay rent.

3) Rite-Aid: Rite Aid was founded by Alex Grass (he just passed away on Aug 27, 2009 at the age of 82) and opened its first store in 1962 as “Thrif D Discount Center” in Scranton, Pennsylvania. It officially incorporated as Rite Aid Corporation and went public in 1968. By the time Alex Grass stepped down as the company's chairman and chief executive officer in 1995, Rite Aid was the nation's largest drugstore chain in terms of total stores and No. 2 in terms of revenue. His son, Martin Grass, took over but was ousted in 1999 for overstatement of Rite Aid's earnings in the late 1990s. Rite Aid is now the weakest financially among the 3 drugstore chains. In 2007, Rite-Aid acquired about 1,850 Brooks and Eckerd drugstores, mostly along the East coast to catch up with Walgreens and CVS. In the process, it added a huge long term debt (currently owes over $5.69 Billion) and is the most leveraged drugstore chain based on its market value. The integration of Brooks and Eckerd did not seem to go well. Revenue from some of these stores went down as much as 20% after they change the sign to Rite Aid. As of 2009, Rite-Aid has over 4900 stores and over $26 Billion in revenues. On January 21, 2009 Moody’s Investor Services downgraded Rite Aid from “Caa1” to “Caa2”, eight notches below investment grade. Both ratings are “junk” which indicate very high credit risk. Rite Aid contacted a number of its landlords in 2009 trying to get rent concession to improve the bottom line. In June 2009, Rite Aid successfully completed refinancing $1.9 Billion of its debts. In September 2009 Rite Aid reported a lower loss for the second quarter ended in August 2009.

Things to consider when invested in a pharmacy

If you are interested in investing in a property leased by drugstore chains, here are a few things you should consider:

  1. If you want a low risk investment, go with Walgreens. In stable or growing areas, the degree of safety is the same whether the property is in California where you get a 6% cap or Texas where you may get a 7.5% cap. So, there is no significant advantage to invest in properties in California as the property value is based primarily on the cap rate. In 2009, the offered cap rate for Walgreens seems to increase about 1% compared to previous years. So you might be able to get some appreciation in your investment when you sell at a lower cap rate in the future.
  2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 10.75%% cap rate in 2009. However, among the 3 drug chains, Rite Aid has 10.5% chance of going under in 2010. Should it declare bankruptcy, Rite Aid has the option to pick and choose which locations to keep open and which locations to terminate the lease. To minimize the risk that the store is shuttered, choose a location with strong sales and low rent to revenue ratio.
  3. If you are not a conservative investor or risk taker, you may want to consider a CVS pharmacy. It has BBB+ S&P credit rating. Its cap rate is higher than Walgreens but lower than Rite Aid. Some leases may offer better rent bumps. On the other hand, some CVS leases, especially for properties in hurricane areas, e.g. Florida are not truly NNN leases where landlords are responsible for the roof and structure. So make sure you adjust the cap rate down accordingly. Some of the CVS locations have onsite Minuteclinic staffed by registered nurses. Since this clinic idea was introduced recently, it’s not clear having a clinic inside CVS is a plus or minus to the bottom line of the store.
  4. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 10,000 - 14,500 SF on a 1.5 - 2 acre lot, preferably at a corner with about 75 - 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-thru. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-thru windows. There is a chance that these drugstores may not want to renew the lease unless the property is located in a densely-populated area with no vacant land nearby. In addition, if you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
  5. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
  6. Many properties may have a percentage lease, i.e. the landlord can get additional rent when the store’s annual revenue exceeds a certain figure, e.g. $5M. However, the revenue used to compute percentage rent often excludes a page-long list of items, e.g. wine and sodas, tobacco products, items sold after 10 PM, drugs paid by governmental programs, etc. The excluded sales revenue could account for as much as 70% of store’s gross revenue. As a result, this author has seen only 1 store in which the landlord is able to collect additional percentage rent. The store with a percentage rent is required to report its monthly sales to the landlord. As an investors, you want to invest in a store with strong gross sales, e.g. over $500 per square foot a year. In addition, you also want to check the rent to revenue ratio. If the figure is in the 2-4% range, the store is likely to be very profitable so the chance the store is shut down is low.
  7. It does not matter how good the tenants are, avoid investing in declining, e.g. Detroit and/or low-income areas or small towns with less than 30,000 residents within 5 miles ring. In a small town, it may be the only drug store in town and captures most of the market share. However, if a competitor opens a new location in the area, revenue may be severely affected. In addition, the tenant can always moves to a new location down the road when the lease expires since there is low barrier to entry in a small town. These properties are easy to buy now and hard to sell later. In 2009 where the credit market is tight, you may have problems finding a lender to finance these properties.
  8. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, think twice about buying this property. You should clearly understand loan assumption requirements of the lenders before moving forward. Should you fail to assume the existing loan (assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and may be liable to pay capital gain.
  9. With few exceptions, drugstore chains do not own the stores they occupy for several reasons. Here are just a couple of them:
    - They know the pharmacy business but don’t know real estate. Stock investors also don’t want Walgreens to become a real estate investment company.
    - Owning the real estate will require them to carry lots of long term debts which is not a brilliant idea for a publicly-traded company.
  10. About 10% of the drugstore properties for sale and typically CVS pharmacies require very small amount of equity to acquire, e.g. 10% of the purchase price. However, you are required to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7-9% range, and the interest rate on the loan could be attractive in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, you have no positive cash flow. This requires you to come up with outside cash to pay income tax on the rental profits (the difference between the rent and mortgage interest). The longer you own the property, the more outside cash you will need to pay income taxes as the mortgage interest will get less and less toward the end. So who would buy this kind of property?
    - The investors who have substantial losses from other properties or stocks market. By acquiring this zero cash flow property, they may offset the income from the drugstore tenant against the losses from other properties or stocks market. For example, a property has $105,000 of rental profits a year, and the investor also has rental losses of $100,000 from other properties. As a result, the combined profits are only $5,000.
    - The uninformed investors who fail to consider that they have to raise additional cash to pay income taxes.

Out of the Box Thinking
If you put too much weigh on the S&P rating of the tenants, you may end up either taking a lot of risks or passing up good opportunities.

  1. Good location should be the key in your decision on which drug store to invest in. It’s often said a lousy business should do well at a great location while the best tenant will fail at a lousy location. A Walgreens store that is closed down later on (yes, Walgreens closed 119 stores in 2007) is still a bad investment even though Walgreens continues paying rent on time. So you don’t want to blindly invest in a drug store simply because it is a Walgreens.
  2. No company is crazy enough to close a profitable location. It does not take a rocket scientist to understand that a financially-weak company like Rite Aid will make every effort to keep a profitable location open. On the other hand, a financially-strong Walgreens will need justifications to keep an unprofitable location open. So how do you determine if a drug store location is profitable or not if the tenant is not required to disclose its profit & loss statement? The answer is you cannot. However, you can make an educated guess based on store’s annual gross revenue is often reported to the landlord as required by the percentage clause in the lease. With the gross revenue, you can determine the rent to income ratio. The lower the ratio, the more likely the store is profitable. For example, if the annual base rent is $250,000 while the store’s gross revenue is $5M then the rent to income ratio is 5%. As a rule of thumb, it’s hard to make a profit if this ratio is more than 8%. So if you see a Rite Aid with 3% rent to income ratio then you know it’s likely a very profitable location. In the event Rite Aid declares bankruptcy, it will keep this location open and continue paying rent. If you see a Rite Aid drug store with 3% rent to income ratio offering 11% cap, chances are it’s a low risk investment with good returns. The weakness of corporate guaranty from Rite Aid is probably not as critical and the risk of having Rite Aid as a tenant is not really that significant.

    Disclosure: The investment strategy and information presented in this article should not be construed to be formal financial planning advice or the formation of a financial manager/client relationship. The author intends to provide information to the general public based on our recommendations of investment strategies and is not designed to be representative of your own financial needs. Please do not make any decisions about an investment strategy without consulting with a qualified professional.

    To ensure compliance with requirements imposed by IRS Circular 230, we hereby inform you that the U.S. Federal tax advice contained in this article is not intended to be used nor has this article been written to be used, and it cannot be used, by any taxpayer for the purpose: (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. No tax advice is being given by this article for any specific transaction. If you desire advice about any particular transaction, then please consult a professional tax advisor.


    David V. Tran is the Chief Investment Advisor at Transmercial, a commercial real estate brokerage, commercial loan broker, and property management company in San Jose, CA. His website is
    www.transmercial.com. He may be contacted at (408) 288-5500. Transmercial does business in all 50 states. David publishes on his blog a daily list of 10 best properties to invest in the US.

    You are welcome to share this report, unedited and in its entirety, with anyone you like. You may not remove this text. © 2007-2009 eFunding, Inc.

Friday, October 23, 2009

Top 7 Properties of 10-09-09

NOI: Net Oper Income
AHI: Avg Household Income

  1. Strip center in Sandy, UT: 7200 SF strip mall on 2/3 acre lot on a main road in a middle class town in Salt Lake City. 100% NNN 10-yrs leased by 2 tenants: Benjamin Moore Paints and Wallpaper Warehouse. NOI $120K/yr. $1.333M. 9% cap.
  2. Brand new mixed used property in San Francisco, CA: 12,500 SF 3-story mixed use building under construction with 8 1200-SF residential units and 3000 SF retail as convenience store. Great demographics: over 700K residents within 5 mile ring and AHI of over $114K/yr. $1.6M.
  3. Famous Dave’s restaurant in Metuchen, NJ: 6200 SF franchised restaurant near Menlo Park Mall in upper middle class suburbs of New York/Newark. 20 yrs NNN corp lease (NASDAG: DAVE). NOI $262K/yr. $2.625M. 10% cap.
  4. Rite Aid in Palm Desert, CA: 17,272 SF 2-yr old drug store in an affluent Palm Desert trade area and across from Eisenhower Health Center. 20 yrs NNN lease. NOI $522K/yr. $6.5M. 8.03% cap.
  5. 24 Hr Fitness Center in Bedford, TX: 40,000 SF fitness center on 3.2 acres parcel in a Dallas metro near freeways 121 & 183. 100% NNN lease with 6 yrs remaining. NOI $662K/yr. $6.3M. 10.5% cap. Buyer to assume existing loan at low 6.25% interest.
  6. Macaroni Grill Italian restaurant in Orlando, FL: 7141 SF franchised restaurant on 1.9 acres parcel in a booming (102% since 2000) and high income area. 100% long term absolute NNN lease. NOI $269K/yr. $3.363M. 8% cap.
  7. Earl Scheib Paint & Body in Long Beach, CA: 6330 SF free-standing building in a densely populated city in Los Angeles. 15 yrs absolute corp lease. NOI $85K/yr. 1M. 8.5% cap.

    © Copyright Transmercial 2009. All rights reserved.

Thursday, October 22, 2009

Top 5 properties of 10-08-09

  1. Taco Cabana restaurant in Mesquite, TX: 3743 SF franchised restaurant on 1 acre parcel in front of Wal-mart supercenter in Northern Dallas metro. 20 yrs absolute NNN lease by a subsidiary of Carols restaurant group (NASDAG: TAST) that operates 559 locations. NOI $156K/yr. $1.95M. 8% cap.
  2. Burger King in Houston, TX: 2929 SF restaurant on 2/3 acre corner lot with frontage on 8-lane 155,000-vehicle-per-day I-10. New 20 yrs absolute NNN lease with a franchisee with 50 locations and over $60M in annual sales. NOI $114K/yr. $1.476M. 7.75% cap.
  3. El Pollo Loco restaurant in Atlanta, GA: 3210 SF franchised restaurant built in 2007 on Bufford Hwy with traffic count of over 80K vehicles/day in an affluent Atlanta town with AHI over $101K/yr. 100% NNN corp ground lease (you buy the land) with 12 yrs remaining. Price increased from $1.134M to $1.164M. Cap reduced from 7.5% to 7.25%. Note: this is probably the beginning of the end of price reduction. Moving forward to 2010, you will see more price increases/lower cap rates.
  4. Burger King in Lewisville, TX: 3756 SF restaurant on .59 acre pad site to a Kroger supermarkets anchored shopping center in a high-income town in Dallas metro. 20 yrs absolute NNN lease. NOI $110K/yr. with 2% annual rent increase. Store with over $1.1M in sales/yr. $1.3M. 8.5% cap.
  5. Shopping Plaza in Mesa, AZ: 82,373 SF mature shopping center on 8.7 acres corner lot in an upper middle-class Phoenix metro with AHI over $98K/yr. 96% leased. NOI $606K/yr. Price reduced from $6.2M to $5.85M. 9.5% cap.

    © Copyright Transmercial 2009. All rights reserved.

Wednesday, October 21, 2009

Top 6 Properties 10-07-09

  1. Shopping Center in Sacramento, CA: 19,913 SF 2-building 10-unit shopping center built in 2005. 80% occupied with 2 vacant units. NOI $402K/yr. Drastic price reduction from 6.287M to $3.995M. 10% cap. Buyer to assume $3.82M loan at 6.48% interest due in 2016. Note: You need just $175K down payment to buy this property!
  2. Popeye’s Chicken in Gresham, OR: 2893 SF brand new restaurant on ½ ac lot across from Safeway supermarkets and Rite Aid anchored shopping center in Portland metro. 100% absolute NNN leased till 2028. NOI $120K/yr. with 10% rent bump every 5 yrs. $1.549M. 7.75% cap.
  3. Tire Plus in Middleburg, FL: 8143 SF brand new automotive center on 1.1 acres parcel in Jacksonville metro. 15 yrs NN lease is guaranteed by Bridgestone Retail Operations, LLC (BSRO) a wholly owned subsidiary of Bridgestone Corporation of Tokyo, Japan. Bridgestone Corporation (BBB+ Credit Rating) which runs over 3000 locations. NOI $217K/yr. with 10% rent increase every 5 yrs. $2.635M. 8.25% cap.
  4. Mini Storage in Sacramento, CA: 25,350 SF mini storage on 1.53 acres lot in a stable area. 83% occupied. NOI $184K/yr. $2.3M. 8% cap.
  5. Shopping Center in Upland, CA: 30,000 SF retail center on over 2 acres lot just off I-10. 75% occupied. NOI $383K/yr. $3.95M. 9.7% cap.
  6. Texas Road House restaurant in Palm Bay, FL: 7202 SF restaurant built in 2004 on 2.34 acres parcel with I-95 frontage. 10 yrs absolute NNN lease with 9 yrs remaining guaranteed by Texas Roadhouse (NASDAG: TXRH). NOI $234K/yr. $2.909M. 8.25% cap.


© Copyright Transmercial 2009. All rights reserved.

Tuesday, October 20, 2009

Top 9 Properties Among 320+ 10/06/09

  1. Walgreens in Birmingham, AL: 13,905 SF drug store built in 1999 on 1.77 acres lot. 20 yrs NN lease with 9.5 yrs remaining. Store with over $6.5M in annual revenue. NOI $289K/yr. $3.306M. 8.75% cap.
  2. Apartments in Dallas, TX: 150-unit mature apartments complex on 5.68 acres lot. 93% occupied. Annual gross rent of over $1.08M. $2.9M. Just over $23K/unit!
  3. Apartments in Sunnyvale, CA: 6-unit apartments located in the heart of Silicon Valley with AHI over $117K/yr. NOI $45K/yr. $920K.
  4. Medical Office building in Oak Lawn, IL: 26,324 SF 3-story class-A medical office building in Chicago metro. 100% occupied by 7 medical tenants. NOI $759K/yr. $9.5M. 8% cap.
  5. CVS Pharmacy in Hanson, MA: 10,125 SF drug store built in 1997 on 5.8 acres lot in Boston suburbs. 20 yrs NN leased till 2018. Store with very strong sales of $9M/year. NOI $178K which includes over $18K in percentage rent. $2.063M. 8.35% cap.
  6. Strip Mall in Bakersfield, CA: 6000 SF strip center on 2/3 ac outparcel to a Wal-mart supercenter. 100% NNN leased by 3 brand name tenants: H&R Block, Check into Cash and Verizon Wireless. NOI $172K/yr. Price reduced from $1.95M to $1.775M. 9.7% cap.
  7. Shopping Center in Frisco, TX: 27,000 SF shopping center on a commercial corridor plus 5.4 acres lot in a fast growing (58% since 2000) and affluent Dallas suburb (AHI $119K/yr). 92% NNN leased. NOI $585K/yr. $6.5M. 9% cap.
  8. Motel in Wichita, KS: 95 unit Garden Inn & Suites on a major artery in front of Towne East Square Mall. $2M.
  9. Single tenant retail building in Abingdon, MD: 20,087 SF retail building on 2.28 acres parcel just off I-95 exit in a high income town NE of Baltimore. Surrounded by Target, Wal-Mart, Lowe' s, BJ' s Wholesale Club and Regal Cinemas. Long term NNN lease by Petsmart. NOI $42K/yr. $4.9M. 9% cap.

    © Copyright Transmercial 2009. All rights reserved.

Transmercial Offers Free Commercial Real Estate Webinars Using Cisco WebEx Technology

San Jose, Oct. 20, 2009. Transmercial announced today it would offer FREE commercial real estate webinars in November 2009 to its investors using Cisco WebEx technology. The first webinar will be its most popular 3-hour-long “How to invest in commercial real estate”. As the seminar is being presented live at its headquarters in San Jose, out-of-state and international investors can call in to listen to this presentation. They can also participate in the discussions and ask questions to David Tran, Transmercial’s Chief Investment Advisor. With a PC and internet access, they will be able to simultaneously see the same Power Point presentation as offered to the local audience. The webinar is intended to educate investors about various aspects of commercial real estate investments, e.g. how to choose a good property, or which property type they should invest in. Transmercial has offered FREE commercial real estate seminars since 2005 at its headquarters in San Jose. As more and more clients are out-of-state and outside of the US, Transmercial decided to use Cisco WebEx technology to help extend educational content to its investors. “We prefer to meet out investors face to face,” Maria Martinez, Transmercial’s spokesperson said, “But webinar is the next best thing.” Per Google, investors from over 20 countries in America, Europe, Asia and Africa have accessed Transmercial blog to view its daily list of “Best properties to invest in the US”. The list provides top 10 best properties between 700,000 and 15 million US dollars chosen by Transmercial among 300-400 commercial properties on the market each day. Transmercial believes that this list of properties will give its clients a better chance of investment success by focusing on key intelligent information that matters most to investors instead of raw data.

About Transmercial


Transmercial (formerly eFunding, Inc.) is a full-service Commercial Real Estate Investments Company in San Jose, CA. It specializes in sales, purchase, loans, property management & leasing of commercial retail and medical centers. The company does business in all 50 states. It can be contacted by phone at 408-288-5500, by email at info@trasnmercial.com. The company website is www.trasnmercial.com.

Monday, October 19, 2009

Top 6 Properties Among 327+ 10/05/09

  1. Single-tenant retail center in Reno, NV: 18,000 SF brand new retail center in a prime commercial corridor in a growing city. Surrounded by Wal-mart, Kohl, Safeway, Save-mart, Walgreens. High income area. 10 yrs NNN leased by Staples. NOI $355K/yr. $4.6M. 7.73% cap.
  2. Restaurant in Hayward, CA: 6717 SF Asian buffet restaurant on .6 acre lot in a high income city in San Fran Bay Area. 100% NNN lease with 3 yrs remaining. NOI $128K/yr. $1.6M. 8% cap.
  3. Single tenant retail in Mesa, AZ: 32,398 SF retail building on 3.5 acres of land in a strong income Phoenix suburb. 10 yrs NNN lease by Goodwill with 6 yrs remaining. NOI $259K/yr. $3.456M. 7.5% cap. Buyer to assume $2.3M loan at very low rate of 5.36%. 11.88% cash on cash!
  4. CVS Pharmacy in Rockland, MA: 10,125 SF drug store in Boston suburbs. 100% NN lease with 8 yrs remaining. NOI $203K/yr. $2.405M. 8.5% cap. Store with strong revenue of over $10M/year, i.e. highly profitable location.
  5. AppleBee’s in Chesapeake, VA: 5156 SF franchised restaurant built in 1993 on 1.2 acres outparcel to 800,000 SF Chesapeake Square Mall in Norfolk metro. Long term NNN lease. NOI $189K/yr. $2.22M. 8.5% cap.
  6. Apartments in Valley Village, CA: 8-unit apartment complex in high income North Hollywood (AHI $92K within 5 miles ring). 90% occupied. Gross income $89K/yr. $1.1M.

    © Copyright Transmercial 2009. All rights reserved.

FREE Commercial Real Estate Seminar/Webinar

NEW: You can also attend the live seminar below by phone (we recommend using a speaker phone for comfort). If you have internet access, you can also see the same presentation. Click here for seminar reservation form.


FREEHow to invest in commercial real estate” seminar/Webinar.

Date: Nov 14, 2009 (note: this is probably the last seminar in 2009)
Time: 8:55AM to noon PST
Place: Transmercial office at 1340 Tully Rd. suite 307. San Jose CA
Presenter: David Tran

This seminar is intended for investors who would like to understand various aspects of commercial real estate investment:


• Compare commercial vs. residential investment properties.
• Commercial real estate terminology: cap rate, NOI, etc.
• Which property type should you invest? Shopping strip, Office building, Apartment, or Gas station? Single tenant or multi-tenant properties?
• How to choose a good investment property.
• Investment returns
• When is a best time to invest in commercial real estate?
• National demographic trends that may influence on where to invest
• Where should you invest?
• Leases: gross lease, net lease, & percentage lease. Which one investors prefer?
• Property Management issues.
• What you should know about financing for commercial properties.
• The offer process, due diligence.

Tuesday, October 13, 2009

How Properties Are Selected

Every day there are about 300-350 new retail and office properties between $700K to $15M on the market in all 50 states listed by various companies. Out of these hundreds of listings, only the top 5-10 properties make it to the list that you see on this blog. By focusing on the short list of best properties, you will save time and are more likely to be successful with your investments.


Below are some of the selection criteria:

  1. Price range: most investors look for properties between $700K and $15M.
  2. Property types: most if not all investors of eFunding want to invest in retail properties and office buildings where tenants sign long term low-risk NNN leases, i.e. tenants pay for property taxes, insurance and maintenance expenses, in favor of landlords. They prefer not to invest in apartments where leases are mostly riskier gross, i.e. landlords pay for taxes, insurance and unpredictable maintenance expenses. Besides, apartment tenants normally don’t have much money which may affect their ability to pay the rent on time.
  3. Cap rate: the return of investment must be “reasonable”, e.g. generally higher than the interest rate. The cap rate is typically lower in CA and higher in other states. However cap rate is not everything.
  4. Property condition: investors prefer properties with little deferred maintenance.
  5. Demographics: the selected properties tend to be in growing, high income and bigger cities/metros as they have better chance to appreciate and easier to find tenants. Besides they are easier to sell if needed.
    ▪ You won’t see properties in an area where people are moving out, e.g. Detroit downtown. These properties are easy to buy but hard to sell. In addition, it’s hard to get attractive financing, if at all, for these properties.
    ▪ Properties in a middle of nowhere won’t make it to the lists. These are also easy to buy but hard to sell.
    ▪ Properties in cities where the average household income is way below the national average, e.g. $28,000/year, also won’t make it to the list as these are most likely high-crime areas.
  6. Occupancy: close to 100%.
  7. Good Visibility: properties tend to have most if not all units facing the road to show case the tenant businesses. Tenants love visibility. What’s good for tenants is also good for investors.
  8. Great locations: properties on a major artery with heavy traffic, near the freeway exit, on corner lot, near a mall, on an outparcel to a shopping center.
  9. Land: if land is not included then it does matter how beautiful the property is, it will not be selected. This is the type of property that is easy to buy but hard to sell.
  10. Lease Type: most likely NNN leases.
  11. Parking spaces: at least 4 spaces per 1000 SF of leasable space.. It’s hard to lease a retail property unless it has sufficient parking spaces.
  12. Age: not over 20 yrs old unless the property is well-maintained or recently renovated.
  13. Price per square foot: sometimes a property is selected because the price per SF is low, e.g. less than $200/SF for a retail property in California. The main reason for the selection is appreciation potential.
  14. Low rent: there is upside potential if the rent is below market. When the leases expire, the rent is adjusted to market rent which increases the value of the property.
  15. Financing: sometimes a property may be selected because it offers attractive financing. For example, the seller is willing to carry 80% LTV at low interest rate or buyer can assume a loan at 5.5% interest, fixed for 10 years. This in turn may increase the overall return or cash on cash. On the other hand, a property may be screened out because it is difficult to get reasonable financing. For example, in this tight credit market it is extremely difficult to get financing for a single-tenant mom-and-pop restaurant.
  16. Misc: A property could be selected or screened out for other reasons
    ▪ If a property has a dry cleaner with onsite cleaning, it will not be selected due to potential soil contamination by a chemical called Perc used in the cleaning process.
    ▪ A property in an affluent Santa Monica, CA could be selected simply because it’s rarely available.
    ▪ A vacant restaurant in front of a mall in San Francisco Bay Area could make the list because it may have lots of interests from investors in CA.


If you are interested on a particular property and would like additional information, i.e. a brochure, please email to maria@transmercial.com. It’s good idea to provide Maria with:


▪ The date the property was selected (not posted date.) This is on the subject of the post.
▪ Name of the property, e.g. Walgreens in Dallas, TX.


You will notice that the properties are posted 1 week after the date they are selected. The reason for this 1 week delay is we don’t want other companies to take advantage of our research work. If you are an investor and would like to receive the list daily without one week delay, we invite you to join Transmercial investors club. The daily list of best properties is emailed to members by 6PM PST, Monday-Friday. The email also contains a 1-page flyer for each selected properties with picture, address, and a brief description about the properties.


Membership to Transmercial investors club is FREE. Click here for details. Don’t worry; there are absolutely no obligations of anything from you to us for being a member. Of course, we hope that you like our work and will eventually ask us to represent you. However, it’s all up to you as you have no contractual obligations to us for anything.

Friday, October 9, 2009

Top 6 Commercial Properties of 10-02-09

NOI: Net Oper Income
AHI: Avg household Income

  1. Shopping Center in Sacramento, CA: 19,913 SF 2-building 10-unit shopping center built in 2005. 80% occupied with 2 vacant units. NOI $402K/yr. Drastic price reduction from 6.287M to $3.995M. 10% cap.
  2. Pizza Hut in Cottondale, AL: 3479 SF pizza restaurant built in 1999 on 2/3 acre parcel just off I-20 exit in Tuscaloosa. 20 yrs NNN lease with 12 yrs remaining from the largest Pizza Hut franchisee with 1154 locations in 28 states. NOI $79K/yr. Price reduced to $935K. 8.44% cap.
  3. Shopping center in Jonesboro, GA: 16,554 SF 3-building shopping center on an outparcel to a Kroger Grocery & Kmart anchored shopping center on a major artery in Atlanta metro. Long term tenants (since 1995): Church's Chicken, Metro PCS mobile phones and Jackson Hewitt Tax Services. 100% NNN leased by 11 tenants. NOI $198K/yr. $2.2M. 9% cap.
  4. Office Building in San Jose, CA: 6520 SF 2-story building on 1/3 ac parcel on Saratoga Ave. in a wealthy part of Silicon Valley. Easy access to I-280 and Fwy-85. Ideal or owner/user. $1.95M.
  5. Valvoline Auto Service Center in Peoria, AZ: 6356 SF auto service and car wash center on 1.10 acre lot in a high income suburban Phoenix. 100% NNN lease. NOI $136K/yr with 3% annual rent bump. $1.5M. 9.06% cap.
  6. Strip Mall in Alameda, CA: 6132 SF strip mall built in 1992 on an outparcel to a shopping center anchored by Lucky Supermarkets and CVS Pharmacy in a high income San Fran Bay Area with very high barrier to entry. 100% NNN leased by 3 tenants: Chase, Quiznos, and Hairmasters. NOI $200K/yr. $2.785M. 7.21% cap.

    © Copyright Transmercial 2009. All rights reserved.

Thursday, October 8, 2009

Top 10 Properties 10-01-09

  1. Tuffy Auto in Orland Park, IL: 3730 SF auto service center built in 2000 on 1 acre parcel in a stable and high income (AHI $80K/yr) Chicago suburb. 100% NNN leased by a Tuffy Auto with over 450 locations in 21 states. NOI $79K/yr. with 10% rent bump in 3 yrs. $995K. 8% cap. Great for 1st time investors. Recession insensitive tenant.
  2. Shopping Center in North Port, FL: 33,590 SF 2-building class-A Office/Retail complex built in 2006 on 4.57 acres parcel in a fast growing town South of Tampa. Current NOI $352K/yr. $4.43M. 8% cap. Note: this is a bank-approved short sale.
  3. Single tenant retail building in Westminster, CO: 3384 SF 5-yr old Check Cashing/Payday Loans building on 2/3 acre corner lot in Denver. 100% NNN corp lease. NOI $95K/yr. $1.08M. 8.84% cap. Recession-proof tenant.
  4. Walgreens in Tucson, AZ: 14,490 SF drug store built in 2004 on 1.74 acres parcel lot with rare 3 frontages. Surrounded by Target, Pier One, Fry' s, Ross, Bed Bath & Beyond, Office Max, Petco, and Dress Barn. 25 yrs absolute NNN lease with 20 yrs remaining. NOI $369K/yr. $4.983M. 7.4% cap.
  5. New Medical Office building in Fort Worth, TX: 10,112 SF new medical office building in a booming (373% since 2000) Fort Worth suburbs. 100% NNN leased by 4 medical tenants. NOI $217K/yr. $2.57M. 8.45% cap.
  6. Single tenant retail in Las Vegas, NV: 30,715 SF free-standing building on 2.53 acres lot at an intersection of 2 major roads. 100% NNN leased by Ross with over 10 yrs remaining. NOI $318K/yr with 10% rent bump in Feb 2010. $4.24M. 8.25% cap in Feb 2010.
  7. Strip Mall in Bakersfield, CA: 6000 SF strip mall on 2/3 acre outparcel to Wal-mart supercenter. 100% NNN leased by 4 brand name tenants: H&R Block, Check into Cash and Verizon Wireless. NOI $177K/yr. Price reduced from $2.1M to $1.95M. 9% cap.
  8. McDonald’s in Kansas City, MO: 6015 SF restaurant on 1.9 acres lot next to I-435. 100% absolute NNN lease. NOI $114K/yr. $1.54M. 7.4% cap.
  9. Walgreens in Denver, CO: 13,905 SF drug store on 2 acre corner lot on a major artery in a high income (AHI $84K/yr) part of Denver. 100% NN leased till 2016. Store with strong revenue of over $7.5M/yr. NOI $363K/yr. $4.27M. 8.5% cap.
  10. Shopping Center in Lancaster, CA: 32,662 SF 4-yrs old shopping center on 2.36 acres lot. Anchored by Dollar Tree and shadow anchored by CVS pharmacy. 100% NNN leased. NOI $413K/yr. $5.165M. 8% cap.

    © Copyright Transmercial 2009. All rights reserved.

Wednesday, October 7, 2009

Top 6 Properties of 09/30/09

  1. Walgreens in Pueblo, CO: 13,813 SF Walgreens drug store built in 2004 on 1.84 acres lot in a fast growth area. 25 yrs NNN lease. NOI $256K/yr. $3.425M. 7.5% cap.
  2. Apartments Complex in Fort Worth, TX: 75-unit apartments complex on 3.66 acres lot in a growing and high income area with AHI over $83K/yr. New roof in 2007. 88% occupied. Potential NOI $97K/yr. $1.75M. 10.7% cap. Just over $23K/unit!
  3. Shopping center in Decatur, GA: 67,940 SF 15-unit shopping center anchored by a 29,210 SF grocery and 8980 SF Family Dollar store in a high income and stable Atlanta metro. 96% leased. NOI $409K/yr. 9.53% cap.
  4. Church’s Chicken in Norman, OK: brand new 2172 SF restaurant on .6 acre in Oklahoma city metro. Near the University of Oklahoma Campus. 20 yrs absolute NNN lease by an operator with 20 restaurants. NOI $104K/yr. $1.23M. 8.5% cap.
  5. Dollar Store in San Jose, CA: 11,972 SF Dollar Store built in 1998 on Story road, across from Wal-mart. 10 yrs NNN lease by a recession-resistant tenant. NOI $307K/yr. Price reduced to $3.97M. 7.75% cap.
  6. Tuffy Auto in Omaha, NE: 3900 SF 2-yr old Tuffy Auto service center on .63 acre pad to newly constructed center anchored by Super Target, OfficeMax, Hobby Lobby & Sports Authority. Across the street from Walmart Supercenter. Fast growth (129% since 2000), high income (AHI $109K/yr) area. 20 yrs absolute NNN lease with corp guaranty from a corp with over 400 stores. NOI $111K/yr. $1.369M. 8.15% cap.

    © Copyright Transmercial 2009. All rights reserved.

Tuesday, October 6, 2009

Top 10 Commercial Properties 09-29-09

  1. TX Land & Cattle restaurant in Arlington, TX: 7918 SF franchised restaurant built in 1997 on 1.47 acres lot near the new Cowboys stadium. 100% absolute NNN lease. Store with strong revenue NOI $160K/yr with $20K rent bump every 5 yrs. plus potential percentage rent. $1.8M. 8.89% cap.
  2. Arby’s in Omaha, NE: 2879 SF restaurant built in 2002 on .6 acre outparcel to Home Depot. New 20 yrs absolute NNN lease from a strong franchisee with 19 stores. Store with strong sales exceeding Arby’s national average. NOI $93K/yr with 8% rent bump every 5 yrs. $1.163M. 8% cap.
  3. Walgreens in Grayson, GA: 14,500 SF drug store built in 2004 on 2.28 acres lot in a high-growth, high income suburban Atlanta. 25 yrs absolute NNN lease. NOI $335K/yr. $4.466M. 7.5% cap.
  4. Wells Fargo Building in Palm Desert, CA: 5000 SF high-quality bank building constructed in 2007 on .85 acre out parcel to a power center anchored by Wal-mart, Sam’s Club, Kohl’s, Ashley Furniture, & Petsmart. near I-15 in a wealthy city with AHI over $113K/yr. 15 yrs NNN ground lease (you own the lot, tenant owns the building). AA- credit rating tenant. NOI $120K/yr with $15K rent bump in 2012. $1.778M. 6.75% cap.
  5. Shopping Plaza in Chatsworth, CA: 7584 SF retail center on .4 acre corner lot in a high income town in LA county. 93% leased. NOI $167K/yr. $2.4M. 7% cap.
  6. McAlister’s Deli in Columbia, SC: 4405 SF franchised restaurant built in 1997 on 1.14 acres lot next to the 110 specialty-store Columbiana Centre Mall in a densely populated retail trade area. 20 yrs NNN lease. NOI $148K/yr. $1.687M. 8.8% cap.
  7. Strip Mall in Austell, GA: 9000 SF retail center on 1.24 acres outparcel to Home Depot at a hard corner of 2 major arteries. Across from super Wal-mart in a growing Atlanta metro. 100% NNN leased by 4 tenants. NOI $247K/yr. Price reduced from $2.8M to $2.6M. 9.5% cap.
  8. Retail Center in San Bernardino, CA: 12,414 SF 9-unit retail center on .63 acre lot. 75% occupied. NOI $147K/yr. $1.699M. 8.7% cap.
  9. Office Building in Plainfield, IL: 45,881 SF 7-yrs old professional center on 3.53 acres lot on the burstling Route 59 in a high-growth (134% since 2000) and high-income Chicago metro. Forbes Ranked Plainfield as "The Fifth Fastest Growing Suburban Community in the U.S." in 2007. 89% occupied. Actual NOI $555K/yr. $6M. 9.25% actual cap. Upside potential when 100% leased.
  10. Single Tenant Retail Building in Hiram, GA: 4500 SF 2-yr old free-standing retail building on .88 ac lot in Atlanta metro. 100% NNN leased by Verizon Wireless till 2016. NOI $198K/yr. $2.385M. 8.3% cap.

    © Copyright Transmercial 2009. All rights reserved.

Top 4 Properties Among 327 09/28/09

NOI: Net Oper income
AHI: Avg. household Income.

  1. Strip mall in Romeoville, IL: 11,167 SF strip center built in 2004 on 1.44 acres parcel in an Chicago suburbs growth (pop increased 95% since 2000). High income area. Good visibility and 3 points of access to the center. 100% leased by 5 tenants. NOI $171K/yr. $1.9M. 9% cap.
  2. Shopping Center in San Jose, CA: 32,253 SF 3-building retail center on 3 acre corner lot on Santa Theresa Blvd. at Snell in an area with AHI over $115K/yr. 100% leased by 16 tenants. NOI $536K/yr. Price reduced from $8.5M to $8.15M. 6.6% cap.
  3. KFC in Fort Oglethorpe, GA: 2750 SF restaurant on .58 acre lot. New 20 yrs absolute NNN lease from a franchisee with 200+ locations. NOI $108K/yr. $1.311M. 8.25% cap. Store with strong sales volume of over $1.4M/yr.
  4. Single tenant retail store in Mesquite, TX: 10,817 SF retail building constructed in 2004 on 1.24 acres pad site to The Marketplace at Towne Centre, a 425,925-square foot power center with Home Depot, Kohl' s, Ross, PetSmart, Michael' s and numerous others in Dallas metro. 10 yrs NNN lease by Lifeway Christian Store with 3 yrs left. NOI $258K/yr. with 10% rent bump every 5 yrs. Price reduced from 2.152M to $1.722M. 15% cap!

    © Copyright Transmercial 2009. All rights reserved.

Friday, October 2, 2009

Top 6 Retail Properties 09-25-09

NOI: Net Oper Income
AHI: Avg Household Income

  1. Burger King in Rialto, CA: 3558 SF fast food restaurant on 1 acre outparcel to a Walmart Supercenter just 1 block from I-10. 20 yrs NNN lease with 9 yrs remaining. NOI $115K/yr. Price reduced to $1.67M. 6.9% cap.
  2. Shopping Center in Mesa, AZ: 28,363 SF shopping center in a higher income part of Phoenix metro. 97% leased. NOI $365K/yr. $4.57M. 8% cap.
  3. Single Tenant Retail center in San Juan Capistrano, CA: 29,000 SF retail building on 2 aces lot as part of a larger shopping center in an affluent South Orange county area w/ AHI $135K/yr. Easy access to I-5. 100% NNN leased by Ross Dress For Less. NOI $345K/yr. $4.75M. 7.2% cap.
  4. Walgreens in Schertz, TX: new 14,820 SF drug store on 2 acres lot near I-35 in San Antonio suburbs. 25 yrs absolute NNN lease. NOI $327K/yr with potential percentage rent. $4.425M. 7.4% cap.
  5. Jiffy Lube in Avondale, AZ: 1947 SF Jiffy Lube built in 2005 on 1/3 ac lot in Phoenix metro. 15 yrs NNN lease by a franchisee with 61 units. NOI $114K/yr with rare 15% rent bump in 2012 and each subsequent 5 yrs. $1.425M. 8% cap.
  6. Medical Office Building in Concord, NC: 9148 SF medical office building just 1 block from Northeast Medical Center in Charlotte metro. 10 yrs NNN by Carolinas Healthcare System, a hospital network located throughout North and South Carolina. NOI $148K/yr with 2.5% annual rent increase. $1.86M. 8% cap.

    © Copyright Transmercial 2009. All rights reserved.

Thursday, October 1, 2009

Top 10 Properties 09/24/09

  1. Jiffy Lube in Pearland, TX: 4155 SF one-year old Jiffy Lube retail building on 1.53 acres of land adjacent from Walgreens at busy signalized intersection (Traffic Counts 55,000 PD) in growing (81.04%) well-off (AHI $86K/yr) Houston outskirts. 20-years absolute NNN leased by 110 unit operator. 10% increase every 5-years. NOI $151K/yr. $1.733M. 8.75% Cap.
  2. Applebee’s Restaurant in Peoria, AZ: 5431 SF Applebee’s Restaurant built in 1993 on 1.39 acres of parcel at major retail location between Arrowhead Towne Center and North Valley Power Center. Long absolute NNN leased by strong operator with 90 locations. NOI $230K/yr. $2.787M. 8.25% Cap.
    Top 10 Sales Volume out of 90 locations
  3. Tuffy/Car-X in Round Rock, TX: brand new 5225 SF automotive retail building along busy thoroughfare in growing (54.80%) & prosperous (AHI $100K/yr) Austin suburbs. New 20-years absolute NNN corp lease. NOI $135K/yr. $1.638M. 8.25% Cap.
  4. Shopping Center in Lake Elsinore, CA: 34,850 SF attractive shopping center constructed in 1991 on 2.68 acres of land with excellent tenant mix at signalized intersection near I-15. 100% NNN leased. NOI $391K/yr. $4.8M. 8.15% Cap. Flyer not included. Please reply for full marketing package.
  5. Strip Center in Rialto, CA: 13,200 SF well located strip center on over one acre lot with excellent visibility in growing San Bernardino County. 82% leased. NOI $146K/yr. Price reduced from $1.8M. to $1.6M. 9.12% proforma Cap.
  6. Days Inn Motel/Retail in Stockton, CA: 70-room motel with two retail units off of Fwy-5. $570K price reduction. $3.730M. Excellent opportunity for owner user!
  7. Shopping Center in Mansfield, TX: 31,184 SF unique shopping center built in 2001 on 3.28 acres of land in booming Dallas suburbs. 94% leased with retail, office and medical tenants. NOI $513K/yr. $5.705M. 9% Cap. Price reduced from $6.422M to $5.705M.
  8. Apartments in Burbank, CA: nice looking 8-units apartments completely renovated in well-off (AHI $82K/yr.) Los Angeles growing area. NOI $101K/yr. $1.797M. 5.15% Cap. Price changed from $1,849,500 to $1.797M.
  9. Shopping Center in San Antonio, TX: 32,623 SF recently constructed shopping center on 3 acres of land conveniently located at hard corner location with strong visibility to Loop-1604. 87% NNN leased. $6.350M. 9.01% Cap.
  10. Office Building in Saint Charles, MO: 6750 SF 2-story attractive office building constructed in 2001 on over 1 acre lot near Barnes-Jewish St Peters Hospital with excellent visibility from I-70. 100% leased. NOI $103K/yr. $1.150M. 9% Cap.

    © Copyright Transmercial 2009. All rights reserved.

FREE “How to invest in commercial real estate” seminar.

FREE How to invest in commercial real estate” seminar.

Please click to download reservation form for November 2009

!RESERVAITION IS REQUIRED!

Date: Nov 14, 2009 (note: this is probably the last seminar in 2009)
Time: 8:55AM to noon PST
Place: Transmercial office at 1340 Tully Rd. suite 3007
Presenter: David Tran

This seminar is intended for investors who would like to understand various aspects of commercial real estate investment:


  • Compare commercial vs. residential investment properties.
  • Commercial real estate terminology: cap rate, NOI, etc.
  • Which property type should you invest? Shopping strip, Office building, Apartment, or Gas station? Single tenant or multi-tenant properties?
  • How to choose a good investment property.
  • Investment returns
  • When is a best time to invest in commercial real estate?
  • National demographic trends that may influence on where to invest
  • Where should you invest?
  • Leases: gross lease, net lease, & percentage lease. Which one investors prefer?
  • Property Management issues.
  • What you should know about financing for commercial properties.
  • The offer process, due diligence.

Please call Maria at 408-288-5500 for schedules and sign up.