The Deal Story - Walgreens (Monticello, NY)

In August of 2021, I had the opportunity to work with Bill Pedersen and Brandon Perez of Matthews Real Estate Investment Services on the purchase of a NN-leased Walgreens asset in Monticello, NY.

 

Ocean Block Capital was attracted to this opportunity for multiple reasons. First, this Walgreens asset sits on an oversized lot on a signalized intersection in downtown Monticello. In addition to its healthy traffic counts and strategic location in the market, the property is home to an investment-grade credit tenant, guaranteeing our ability to collect hassle-free rent through the expiration of the lease.

 

Although the asset had many attractive characteristics, the tenant had delivered a termination letter informing the landlord of their intention to not renew the lease at its expiration. After owning the property for over two decades and enjoying the passive cash flow provided by the asset, the landlord was now facing the prospect of not only losing this passive income, but he would also have to take on the real estate taxes for the property.

 

Contrary to traditional net lease investors, we at Ocean Block have a higher appetite for risk due to our ability to reposition and redevelop assets with strong fundamental real estate. After further analysis of the Monticello market and discussions with our development team, we decided that the underlying real estate of the Walgreens was strong enough for us to take on the added risk created by the tenant’s termination letter.

 

Considering the tenant had signaled their intention to vacate the site, I was able to get our team comfortable with this investment through my creative underwriting and thorough market research. Despite being in the midst of a global pandemic, I was still able to accelerate our due diligence process to accommodate an expeditious closing timeline. As always, we wanted to ensure that this deal went as smoothly as possible for all parties involved.

 

This transaction was opportunistic in nature and successful for both the purchaser and seller. At Ocean Block, we value the ability to reposition riskier assets with strong fundamentals that might not be desirable to typical net lease investors. We continue to hold the Walgreens in our portfolio and look forward to working with Bill and Brandon again in the future.