Takeaways from GlobeSt. Net Lease Conference

GlobeSt. NET Lease Conference
NYC – April 5^th, 2022

InCommercial represented at the Spring ’22 Conference.
Connections made. Hands shook. Babies kissed. The music will not stop in 2022.

MAJOR TAKEAWAYS:

While the current STNL marketplace faces fresh headwinds, the prevailing consensus is excess investor demand will assist in offsetting continued monetary and geopolitical shocks.

With that said, with market fundamentals softening, transactions are beginning to be affected with Brokers reportedly experiencing escrows falling out-of-contract at approximately 3x their normal rate.

ATTENTION SELLERS/BROKERS – InCommercial stands ready to offer a high probability close with a professional counterparty as Buyer performance rates drop and threaten your on-going and future transactions.

International Women’s Day Interviews

In the spirit of International Women’s Day at InCommercial Property Group, we have asked what the day means to some of our female leaders in the commercial real estate industry, advice they’d give, barriers overcome, and who inspires them. On this day, we acknowledge the individuals, groups, and organizations that have come together to advocate for women’s empowerment. Together, we reflect and discuss what International Women’s Day means to each of us.

Tiffany Fraley, COO

What does International Women’s Day mean to you?
It is a celebration of women’s achievements and an acknowledgement of the strides we have made economically, politically, socially, but also a reminder that we still have a lot of ground to make up as long as inequality, especially for women, exists in the world.

What barriers have you faced, as a woman, in becoming successful in your field? How did you overcome them?
The real estate industry is very male driven which makes sense because women didn’t gain the right to own property until the 19th century and even then, we couldn’t afford it because we couldn’t take out lines of credit until the 20th century. These types of barriers take time plus an effort and a struggle that I’ll probably never face, along with change and acceptance. As a Caucasian woman in America, I know that the barriers I face are far different than women of color and other nationalities. I am able to overcome most barriers because I have the choice and the opportunity to overcome them. For instance, I was allowed to go to college and graduate school which for some is a huge barrier due to culture or economics.

How do you help to empower women or encourage others to pursue leadership roles in their career?
I think one of the biggest ways I empower and encourage women is to really listen to what they want, write it down and then work out a measurable plan to accomplish it.

What advice would you give to someone just starting out their career?
The same advice I’d give to someone starting out in their dating life, try a lot of different ones and don’t settle, ha! With each job, you’ll find out more about yourself, what you like, where you can improve and you’ll be that much better and prepared for the next role.

Is there someone that has empowered you or a strong woman that inspires you (professional or personally)?
I don’t give her enough credit, but my mom always supported my endeavors and never held me back…even when that meant moving out of my home state, Tennessee. She’s a very brave, kind and generous lady who likes to cuss a little and drink miller lite. She taught me to have thick(ish) skin, work hard and to love animals. At my core, I know that she is the reason that I am who I am.

Claudia Sapir, Senior Transaction Coordinator

What does International Women’s Day mean to you?
A day that recognized all women regardless of their race, religion, political affiliation, or economical and professional status.

What barriers have you faced, as a woman, in becoming successful in your field? How did you overcome them?
Probably at the beginning but once I became more knowledgeable and passionate about my job, I never felt there were any barriers.

How do you help to empower women or encourage others to pursue leadership roles in their career?
There is nothing we can’t achieve. If we have the correct mindset, we will be able to conquer every goal.

What advice would you give to someone just starting out their career?
Always study, learn as much as you can. Work hard. Be many steps ahead.

Is there someone that has empowered you or a strong woman that inspires you (professional or personally)?
A public personality, I would say Michelle Obama. In the personal and professional field, Tiffany Fraley is a great example of growth, hard work and confidence. I think she empowered me and many women (and men) in our company.

Karla Lombardi, Controller

What does International Women’s Day mean to you?
The day gives us space to reflect on how far we’ve come and discuss how much more work there is to be done. We have to end violence against women – domestically and abroad, in our homes and outside of them. We have to remove bias from education. We have to continue to fight for equal parental leave. More women need a seat at the table.

What barriers have you faced, as a woman, in becoming successful in your field? How did you overcome them?
It was very challenging to be in consulting as a new mom! I had to set boundaries (which weren’t always respected). I missed a promotion because I “lost” three months of experience (while on maternity leave). I overcame it by leaving public accounting to do in-house tax planning for a Fortune 100 company.

How do you help to empower women or encourage others to pursue leadership roles in their career?
I always offer career advice to my female coworkers. I’ve been active in the women’s groups, as well as PRIDE. I mentor anyone who will let me.

What advice would you give to someone just starting out their career?
Know your worth and negotiate! It’s easy to believe that you’re paid fairly, and it’s uncomfortable to ask for more, but you’ll never get if you don’t ask for it.

Is there someone that has empowered you or a strong woman that inspires you (professional or personally)?
I’ve been fortunate to have worked for several strong women ever since I changed my career to accounting. At a previous company, the VP of Treasury was an amazing mentor who always found time to support me in my career and offered to open doors for me (yet I hesitated to let her?!). There were a lot of incredible female leaders there who noticed that there weren’t enough women in upper management, so they started a women’s group specifically for Finance. It was so empowering to get time with these leaders and connect with them about not just our careers, but life in general. Ever since my first accounting job, where I worked for an extremely intelligent, successful Controller (and a SuperMom), I’ve wanted her job. Last but not least, a major reason I came onboard here at InCommercial was to work for one of the best, Tiffany Fraley!!!

Aloha! Let’s Luau

The InCommercial team escaped the Chicago winter for a much-needed Luau office party! They brought the leis, mai tais, and Hawaiian sunshine to the office. With a variety of appetizers, from upside down pineapple cupcakes to Hawaiian ham and cheese sliders, the team indulged in some yummy dishes. To complement these dishes, a variety of Hawaiian themed beverages were displayed, including the “shark bite” drink and Mikey’s famous mai tai – all topped with little umbrellas and festive garnishes. To tie it all together, leis were happily passed around as the team relaxed, socialized, and listened to island inspired music. What a wonderful way to end a Friday in the office, Aloha!

Part 2: Brokers Analyze Dollar Store Hybrid Concepts Market Disruption

InCommercial Retail VPs and Net Lease Experts, Michael Mintz and Ryan Wewerka, Expand on Changes and Disruptions in the STNL Industry with Connect CRE – Dollar Tree and Family Dollar Combo Store: Success and Market Disruption Continues

Single-tenant net-leased (STNL) product is being gobbled up by funds, 1031 investors and individuals alike. There is a clear desire for new credit-worthy product. Fortunately, the STNL market, dominated by dollar stores as of late, is quickly absorbing Dollar Tree Corp.’s new concept of a Family Dollar and Dollar Tree Combination store. The new store concept combines, under one roof, the characteristics that people love about each: Family Dollar’s great value and selection; and Dollar Tree’s “thrill of the hunt ” items.

Per Coresight Research, approximately 3,300 stores opened in 2020, with another estimated 4,000 to open in 2021. Of those 7,300 store openings, 3,150 or 43% of them are dollar stores. Dollar Tree has targeted locations for the development of over 3,000 stores in 2021 and beyond. The question on the minds of many investors is, are they a viable product that can be relied upon over the course of the lease term, or are they an experiment to be quickly discarded?

“Given Dollar Tree’s interest in continuing growth for new combo stores and redeveloping existing locations into combo stores, I believe the horizon is far off,” said Michael Mintz, VP of retail investment sales, InCommercial Property Group.

In its Q2 press release, Dollar Tree stated, “Combo Stores, on average, are delivering: 23% more sales; 31% more gross margin dollars; approximately 120% more cash contribution dollars, and reducing payback time by approximately 30%. New Combo Stores compared to similarly-sized Family Dollar stores are showing a sales increase of over 17%, and renovated or relocated Combo Stores are showing a sales increase of over 40% when compared to Family Dollar stores that have not been renovated or relocated.”

Although the data set is only a couple of years old, combination stores are not only surviving, they are also thriving and taking over market share. The investor market is taking notice and showing confidence with their wallets. While there has been cap rate compression in the STNL market over the past 20 months, combo store sales cap rates have compressed 85-125 basis points since the beginning of 2021.

“Dollar Tree will continue to focus on the growth of the Combo store. The 3,000-plus markets identified for new Combo Stores are only the tipping point for rest of 2021 and into 2022,” said Mintz.

Mintz and Ryan Wewerka of InCommercial are actively representing buyers and sellers of the combo store concept and will continue to monitor the progress and impact of them on the STNL marketplace.

Michael Mintz and Ryan Wewerka of InCommercial Property Group have been actively selling and analyzing these hybrid concepts nationwide on behalf of buyers and developers. InCommercial Property Group is based in Chicago and is a real estate brokerage firm and fund manager.

Read the Connect CRE article here: https://bit.ly/3b9DW16

Read their previous article on ConnectCRE here: https://bit.ly/3jPBaTZ

We’re Off to the Races

To kick off the 2021 ADISA Annual Conference, InCommercial Property Group hosted an event with Exotics Racing and Supercar Driving at the Las Vegas Motor Speedway. Industry colleagues joined InCommercial team members for an evening of go-kart racing, professional driving, drifting, and adrenaline-spiking fun. InCommercial thanks the Exotic Racing staff for their help creating the ultimate comradery experience, and for a fantastic kick-start to the ADISA conference.

Brokers Analyze Dollar Store Hybrid Concepts

InCommercial Brokers and Net Lease Experts, Michael Mintz and Ryan Wewerka, Discuss and Analyze Dollar Store Hybrid Concepts with Connect CRE, as Dollar Tree and Family Dollar Turn the Investment Market on Its Head.

Family Dollar and Dollar Tree stores have seen staggering returns over the past several years, particularly during the pandemic when they announced more than 600 new store openings and, according to 2020 Annual Report, reported sales exceeding $25 billion for the first time. Following Dollar Tree’s acquisition of Family Dollar in 2015, the integration process saw challenges, but given the aforementioned growth and an exciting new concept that has shown promising results, the future looks bright for the discount store giant.

In 2019, Dollar Tree came up with a visionary hybrid concept. They introduced the Family Dollar and Dollar Tree combination store. The concept combines, under one roof, the characteristics that people love about each: Family Dollar’s great value and selection; and Dollar Tree’s ‘thrill of the hunt’ items.

In 2020, Dollar Tree trialed 50 of these next generation stores. According to Dollar Tree chief executive Michael Witynski, “The combination stores are more productive, produce higher gross margins, are better leveraging stores costs. Our goal is to have formats that leverage the best of Dollar Tree and Family Dollar brands to serve customers in all types of geographic markets.” Given the rapid ascension, Dollar Tree has identified 3,000+ markets for future growth. This accountment has been met with great enthusiasm by the triple-net and 1031 investment communities.

NEW CONCEPT INSIGHTS:

Store size 10,500 square feet (1,000 square feet larger than the typical Family Dollar prototype to accommodate the additional $1 products)

New strategic store format targeted for small towns and rural communities with populations of 3,000 to 4,000

Same-store sales for trial stores have shown them to be “more productive, produce higher gross margins, and, in aggregate, have delivered […] sales lifts of greater than 20%”*

In February of 2021, Dollar Tree received an upgrade of its investment-grade credit rating from BBB- to BBB. Standard & Poor’s credits the upgrade to Dollar Tree’s resilient performance throughout 2020’s government-imposed shutdowns.

“With their new concept combined with an upgraded credit rating, Dollar Tree Inc. is operating with recession resistant, essential service product perfectly suited for investors seeking low risk real estate,” says Michael Mintz, VP of investment sales, InCommercial Property Group.

Read the Connect CRE article here: https://bit.ly/3jPBaTZ