MCDERMOTT COLUMN: New Walgreens gets new buyer

Blue-chip retail tenants continue to lure in investors seeking a dose of commercial real estate.

Case in point: The region's newest Walgreens store has changed hands for nearly $7.4 million.

The sale of the 14,500-square-foot pharmacy near U.S. Highway 17 and S.C. Highway 41 in Mount Pleasant was announced last week by The Boulder Group, a Chicago-based brokerage that handled the deal.

The standalone store was built and opened last year. County records show the seller was a real estate investment group, CAP Mount Pleasant LLC. The identity of the Illinois-based buyer was not immediately available.

The new owner paid about $508 on a per-square-foot basis. But commercial real estate professionals typically place more importance on the "cap" rate -- a percentage that's reached by dividing a property's first-year income by the purchase price. That figure was not disclosed, but the length of Walgreens' lease was: 25 years.

The buyer flipped proceeds from a previous undisclosed sale into the Walgreens deal to avoid paying capital gains taxes. It's a common real estate practice known as a "1031 exchange." The number is a reference to the section in the tax code that spells out the rules.

But the 1031 game has gotten trickier because the prolonged real estate downturn has wreaked havoc with commercial property values. That's made the most desirable investment-grade buildings tougher to find, not to mention pricier.

Jimmy Goodman, a partner in The Boulder Group, said 1031 investors "continue to pay a premium for single-tenant Walgreens properties as they are considered one of the most stable single-tenant real estate investment options."

A similar tax exchange went down less than a year ago, when investors snapped up the CVS-anchored property on George Street near the heart of the College of Charleston for $9.5 million.