The task of selling leases for bankrupt Rite Aid store locations began this week.
The publicly traded pharmacy chain has hired A&G Real Estate Partners to sell 78 leases for Rite Aid and its subsidiary Bartell Drugs across the nation. Exactly 16 of these stores are in California.
Leases on the market in Southern California include locations in Alhambra, Costa Mesa, Covina, Dana Point, Downey, Irvine, La Mirada, the Culver City area, Menifee in Riverside County and Yorba Linda in Orange County.
Northern California locations include Cupertino, Monterey and Santa Cruz.
Mike Matlat, A&G’s senior managing director, forecast a lot of retailers would take interest in the box stores that range from 6,400 square feet up to 37,154 square feet. “It includes dollar stores, gyms, grocers, specialty discount stores and fast-growing quick-serve restaurants,” Matlat said in a statement.
An A&G statement also guaranteed that the Rite Aid leases have 10 years or more remaining on their terms. The lengthy lease time should help sales, said Robert Coron, a broker and senior vice president with Kidder Mathews.
“The value of the lease is determined by a lot of factors. One is by how much term of the lease is left,” Coron said. “If I have five years or three years left, it is not worth anything.”
Retailers will spend a lot of money on building out the store, so they need time to amortize the costs, Coron explained. He also noted that other factors come into play to determine the value of a lease, such as the physical condition of the store. Freestanding stores often command the highest prices, because tenants have more control over their space.
He estimated the rents for the leases for sale will be below market rate. Ultimately, prices will be determined by what a buyer is willing to pay. Some landlords may buy leases so they can redevelop the area around the store, he said.
Under bankruptcy laws, Rite Aid will be responsible for at least 15 percent of rents for the leases they are trying to dispose of, said Ron Friedman, a partner with Marcum in Los Angeles.
“They can settle for 15 cents on the dollar,” Friedman said.
RIte Aid filed a Chapter 11 reorganization bankruptcy on Oct. 16. In addition to the lease sales, it plans to close 154 stores, or about 7 percent of its 2,200 locations. Also, A&G Real Estate Partners will market for sale 21 fee-owned properties that serve as Rite Aid locations, which come with the land and the store. One of the fee-owned properties is in California.
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