ExchangeRight Real Estate has acquired a 13-asset retail portfolio encompassing north of 425,000 square feet from Tractor Supply in a sale-leaseback deal. JRW Realty and Berkeley Capital Advisors represented the buyer and the seller, respectively.
The portfolio spans nine states, including Arizona, Florida, Georgia, Indiana, Maryland, Ohio, Pennsylvania, as well as South Carolina and Texas.
ExchangeRight’s business involvement with Tractor Supply has started more than a decade ago, according to prepared remarks by Melinda Martson, president of JRW Realty. Since then, the firm’s portfolio of Tractor Supply net-leased assets has grown to more than 100 facilities as of October 31, 2024.
At the end of June, Tractor Supply operated 2,254 stores in 49 states.
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ExchangeRight provides 1031-exchangeable portfolios including net-leased and value-add properties, as well as preferred equity and REIT investments. At the end of September, its Essential Income REIT owned 353 retail assets throughout 34 states, totaling 4.8 million square feet. The properties were 98.4 percent leased on average to 37 tenants overall.
Higher cap rates for net-leased retail
Cap rates have been rising for net-leased assets since June 2022—translating into more competitive prices—according to a report by The Boulder Group. For retail, the rate inched up 3 basis points quarter-over-quarter as of September.
Transaction activity for net-leased assets is expected to pick up the pace but remain within the lower confines of the historical framework, according to Boulder Group President Randy Blankstein.
“Furthermore, it is expected that the 1031 market will need two or three quarters of increased activity… to absorb supply in the net lease market,” the report stated.