Oak Street adds to regional Walgreens portfolio

On the heels of a similar spate of purchases early in 2021, a pair of Oak Street Real Estate Capital funds have acquired a handful of net-leased, single-tenant retail sites occupied by Walgreens.

In all, Oak Street’s Project Jupiter NLP LLC and Project Jupiter Fund V LLC purchased five Walgreens stores last month for $26.88 million, property records show.

The deal for the stores, in Plant City, Englewood, Estero, Lehigh Acres and Fort Myers, come as private equity firms such as Oak Street have increasingly focused their efforts on net-leased properties, in which tenants pay rent and expenses such as taxes, insurance or utilities.

Such properties, leased by credit-worthy tenants, typically produce stable and risk-mitigated returns to investors over long lease periods.

At the same time, occupiers such as Walgreens, a subsidiary of Britain’s Walgreen Boots Alliance and the nation’s second-largest drug store chain, find sale-leaseback transactions attractive because they generate capital that can be used for expansions or other corporate purposes.

Earlier this year, another pair of Oak Street funds acquired an additional five Walgreen-occupied stores in Pinellas, Pasco, Manatee and Lee counties for roughly $30 million, according to county property records.

Officials from Oak Street, which was formed in 2009 and has invested roughly $7 billion, did not return a telephone call for comment on its latest Walgreen deal. Net-leased retail and industrial properties currently account for about 35% of Oak Street’s portfolio, according to published reports.

Last year, the firm invested $725 million to acquire a portfolio of Big Lots stores in several states, and more sale-leaseback transactions could be forthcoming.

This Spring, Oak Street announced that it had hired Colleen Collins, a former GE Capital executive, and Guy Ponticiello, CBRE Group’s national practice leader of its corporate capital markets division, as managing directors.

Both Ponticiello and Collins are expected to focus on “sourcing and structuring sale-leaseback transactions,” according to press releases on Oak Street’s website.