Even before COVID-19, grocery stores were a popular real estate investment product due to their prime locations and long-term net leases. This interest has continued to grow because of the stores’ classification as ‘essential businesses’ and the fact that stores were able to stay open even during the pandemic and its landlords suffered no loss of rents. During the last quarter, International Capital was able to successfully close on two grocery stores on behalf of two clients. In addition to the purchase of a Florida Aldi, International Capital was able to acquire for the first time a store leased to its direct competitor Lidl, another German grocery giant.
Both properties were ground leases. These investments offer excellent long-term and passive real estate investments that also yield a stable return over the holding period.
The 3 acre Lidl site is located in Marietta, Georgia, which is part of Atlantas MSA. The 20-year lease has four 5-year extension options. The store was built in 2020 and has a retail space of 29,000 SF, which is 20 percent more than the usual store size of an Aldi. Lidl currently operates five stores in the greater Atlanta area and plans to further expand their stores over the next few years.
Lidl has invested over $ 100 million in the construction of a 925,000 SF distribution center in Covington, about 30 miles southeast of Atlanta, and employs almost 300 new employees at the location. After entering the US-market in 2017, Lidl now operates four distribution centers and over 100 stores in nine US states: Virginia (where Lidl's US headquarters are located), Georgia, North Carolina, South Carolina, Maryland, Delaware, Pennsylvania, New Jersey and New York.
The Aldi in Hudson, Florida, approx. 35 miles north of Tampa, lies on the Gulf of Mexico, and has 23,600 SF of retail space which is representative of Aldi's current store size. The supermarket was built in 2020 and is located on a 3.59 acre lot, directly on a major thoroughfare in the area. The direct neighbors at the intersection are a new WaWa gas station, BB&T bank, Burger King, a Publix grocery store, a CVS drugstore and a large shopping center complex with other retailers. The lease has an initial term of 20 years with six 5-year lease options.
Martina Crevecoeur, CCIM, Senior Vice President of Acquisitions / Dispositions at International Capital LLC, represented the investors in the transactions.