Another productive week in the books, as we continue forward! Some takeaways; while this Covid-19 market disruption was impossible to predict, it could uncover opportunities along the way.
With many institution and investors on the sidelines, many will wait for full clarity and market stabilization to start buying again. Some, however, will take some calculated risk, and look for opportunities. That could be better pricing, evolving companies/credits and/or less competition.
Some high-level questions I continue to ask myself:
• Which companies are performing well right now?
• Which ones are on the sidelines, but well equipped to rebound?
• Which companies will be challenged the most?
Onto Some Deal Flow
Last week, we received commitments on several more Dollar General units. Part of the fun in selling DG’s is getting to underwrite and assess markets across the country. Along with helping buyers understand demographics, traffic patterns, economic drivers and tax benefits. DG continues to do a great job providing essential goods to people across America. It’s nice to be a part of transactions that help play a part.
Tractor Supply: Demand has continued for TSC units. We have a few additional state specific buyers looking for product. Especially for established stores with leases that contain 10% rent bumps.
Drug Stores: A category for us that is seeing increased activity! Our MSP metro Walgreens deal was put under contract quickly and with many offers. We have a MSP metro CVS that will be hitting the market this week. It will be interesting to see the national and regional appetite and interest – I expect it to be solid. Because these essential businesses continue to do a great job of helping Americans stay healthy, as well as providing food and products, I presume investors will continue to look here for opportunities.
Market-Wide Tenant Intel: I spoke to several tenant rep. brokers this week who reported that some brands are continuing with growth. Some fast food names with large drive-thru businesses were mentioned, as were dollar stores and auto parts. It will be interesting to see brands continue to adapt to growing trends in this climate. Are pizza drive-thrus next ?!?
Challenges
Movie Theaters: A hot topic, and I’m eager to see which movie groups put safe initiatives out first. How soon can they open again and what makes us feel safe enough to visit the movies? I’m optimistic!
Fitness: Another huge part of American culture. I personally think the value priced facilities will do better than expensive ones if they are proactive with safety and technology. I think people will start off slowly before committing back to their old schedules. I will continue to monitor and report back.
Retail Highlights / Positive Experiences
I’m going to take my broker hat off for a minute and outline 3 positive consumer retail experiences over the past few weeks.
Home Depot: My remote office has been in NW Wisconsin for the past month. Home Depot has done a great job of providing me with a wide variety of products, timely shipping and competitive pricing. They do an excellent job with most things, which makes me continue using them. While here, I have purchased a water softener, mailbox, lumber and tools. No complaints.
Bonobos: This men’s clothing brand does a nice job of mixing customization, in store experience, and online shopping. They rely on a single initial meeting to size customers and direct shopping almost exclusively to their website afterwards. Returns can flow back to the stores or via mail.
Finish Line Sports: My personal favorite place for buying running and workout shoes online. Always competitive with fast shipping and good tie-ins with their brick and mortar business. Good pricing and easy to navigate website.
Not necessarily a perfect tie to our NNN business, but some examples that other brands could follow in upcoming weeks. We shall see!
Wishing you all continued health and safety!
Brian
