- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Coaching Changes
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Dollar General Triple N Net Lease
Posted on 12/28/22 at 9:15 am
Posted on 12/28/22 at 9:15 am
Anyone have any knowledge on these. How much it cost to build and contract terms. Not finding much info on how to get started.
4
Posted on 12/28/22 at 9:19 am to Tulip
Margins are razor thin. There are companies that can build those for like $50 a square foot!
Why would you want to get involved?
Why would you want to get involved?
Posted on 12/28/22 at 9:38 am to Tulip
quote:
Tulip
quote:
Dollar General Triple N Net Lease
Does not compute
Posted on 12/28/22 at 10:09 am to I Love Bama
quote:
Margins are razor thin. There are companies that can build those for like $50 a square foot!
Why would you want to get involved?
Agreed. If you are trying to do a merchant build and sell it upon completion, not worth it unless you have scale.
Posted on 12/28/22 at 10:22 am to Tulip
I finance the construction and permanent loans for these buildings. As was mentioned it is about scale to build these things as cheap as possible.
Also right now Dollar Generals are expensive and the cap rates are super low.
It requires significant down payments to make the cash flow work. There is mostly institutional money and 1031s that buy these things now.
Also right now Dollar Generals are expensive and the cap rates are super low.
It requires significant down payments to make the cash flow work. There is mostly institutional money and 1031s that buy these things now.
Posted on 12/28/22 at 11:27 am to Tulip
Long time banker - these are a no go right now. You’ll never sell it upon completion (are it will be difficult). Cap rates on these are super low so someone would have a negative leverage return (cap rate less than interest rate) unless they pay cash. Plus if they’re financing they would likely get max 50% leverage as the cash flows just don’t work.
Additionally, some of these DG leases are flat 20 year leases meaning no rent bumps. Add that to the increasing interest rates and the investment just doesn’t make sense.
Take a look at how many STNL deals there are just sitting on the market right now.
Additionally, some of these DG leases are flat 20 year leases meaning no rent bumps. Add that to the increasing interest rates and the investment just doesn’t make sense.
Take a look at how many STNL deals there are just sitting on the market right now.
Posted on 12/28/22 at 7:36 pm to Im4datigers
I thought they were 4-6% for years? Maybe lower than that? I’d assumed you had to be a pretty big investor to get into them anyway?
Even a couple years ago people were suggesting to never buy one in a rural area because you had very little chance of much appreciation in the land value and frankly that’s where a lot of the money was to be made. But if you got into them in decent suburban or urban area and could get a significant ROI on appreciation you’d be doing ok.
Given all of that and what was already said, DG’s are killing it and popping up everywhere still so someone’s making some money.
Even a couple years ago people were suggesting to never buy one in a rural area because you had very little chance of much appreciation in the land value and frankly that’s where a lot of the money was to be made. But if you got into them in decent suburban or urban area and could get a significant ROI on appreciation you’d be doing ok.
Given all of that and what was already said, DG’s are killing it and popping up everywhere still so someone’s making some money.
Posted on 12/28/22 at 8:02 pm to baldona
Mostly 5-8% with 8% being the rural older stores with not a lot of tail left on the lease. Those are scary as many of the DG’s are going to the larger stores that have the grocery component to it.
Most of the 4 caps I see are chik fil a land leases. Haven’t seen many of those lately though.
If you plan to develop and build one for sale, yes you have to be a preferred developer on DG’s list. I have a couple of clients that used to develop DG’s but have def backed off in recent years.
Most of the 4 caps I see are chik fil a land leases. Haven’t seen many of those lately though.
If you plan to develop and build one for sale, yes you have to be a preferred developer on DG’s list. I have a couple of clients that used to develop DG’s but have def backed off in recent years.
Posted on 12/28/22 at 8:21 pm to Tulip
I am not certain but a guy who I know in BR got involved years ago and is doing quite well.
Posted on 12/29/22 at 10:20 am to SalE
If you are not on the preferred DG builders list its a no go for you. The contractors who get this work are also holding inventory on building materials that meets DG's spec. You wouldn't be able to build it as cheap or fast as those guys. Also, like mentioned above, good luck getting financing.
Posted on 12/29/22 at 10:40 am to Im4datigers
quote:
If you plan to develop and build one for sale, yes you have to be a preferred developer on DG’s list. I have a couple of clients that used to develop DG’s but have def backed off in recent years.
Interesting, so they are developed first and then the "store" is sold to a DG franchisee? I would have thought the DG franchisee would want a store, find a landlord, and then approach a builder.
Posted on 12/29/22 at 10:55 am to baldona
DG does not franchise. They use developers to handle all of the dirty work (entitlements) and pay rent. The developers I know that work with DG almost solely do their work.
Posted on 12/29/22 at 3:11 pm to HamCandy
quote:
DG does not franchise. They use developers to handle all of the dirty work (entitlements) and pay rent. The developers I know that work with DG almost solely do their work.
So I gotta assume the developers know what will be bought before they build right? I wouldn't think they'd start building without an agreement signed?
Posted on 12/29/22 at 8:20 pm to baldona
quote:
So I gotta assume the developers know what will be bought before they build right? I wouldn't think they'd start building without an agreement signed?
Yes they will start building before. Keep in mind, the developer is building for DG. DG has also signed a lease with said developer for once they take occupancy (there are really strict guidelines in their construction contracts for delivery deadlines).
So even if the developer doesn’t sell it right after completion, they have cash flow coming in from DG’s lease payment. A lot of the developers have enough profit baked in that they’re still just fine in these situations. Some developers even hold them long term or if they are lucky enough to have negotiated lease bumps after 5 years they’ll hold them until then to theoretically make more on the sale. With cap rates rising that bump probably isn’t as beneficial anymore
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News