New Single-Tenant Rite Aid in Menifee Trades for $523/SF and a Cap Rate of 4.72%

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A private investor paid $9 mil for a new, single-tenant absolute net-lease Rite Aid property in the Inland Empire city of Menifee. The 17.2k sf ($523/sf) property is located at 28995 Newport Rd, just east of I-215. The deal came in at a 4.72% cap rate.

Completed in late 2016, the freestanding building with a drive-thru is situated on a 1.63-acre parcel of land at the southwest corner of Newport Rd and Menifee Rd in Menifee. Rite Aid has nearly 20 years remaining on the initial term with increases every 10 years.

Hanley Investment Group’s Kevin Fryman represented the seller, Parkcrest Construction Inc, out of Ontario. The buyer was repped by Ron Duong of Marcus & Millichap.

“The sale of the Rite Aid represents the lowest cap rate for a single-tenant Rite Aid in the Inland Empire ever,” said Fryman. “It was also one of the lowest cap rates for a fee-simple Rite Aid nationwide.”

“Currently, there are no competing drug stores in the immediate trade area,” said Fryman. “Rite Aid, the third-largest U.S. drug store chain, has been seeking the Federal Trade Commission approval of their merger with Walgreens since October 2015. To obtain approval, there have been plans to divest between 1,000 to 1,200 stores to Fred’s after they were denied in an earlier plan to divest 865 stores.”

According to a report in the New York Post on February 16, 2017, the companies may be close to winning Federal Trade Commission approval with a revised plan, possibly in the next two to four weeks, says Fryman. Combined, Walgreens/Rite Aid would have a reported 46% US market share.

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