Walgreen Co. sold a portion of its headquarters complex in suburban Chicago to property investor Realty Income Corp., which will lease the space back to the largest U.S. drugstore chain.
Realty Income paid $85 million for the real estate, according to a person with knowledge of the transaction who asked not to be named because the price wasn’t announced. The 38-acre (15-hectare) property in Deerfield, Illinois, has 574,605 square feet (53,383 square meters) of space, brokerage Jones Lang LaSalle Inc., which represented Walgreen, said in a statement today.
The property’s location and Walgreen’s investment-grade credit rating will give Realty Income a secure source of income, Bruce Westwood-Booth, a managing director at Jones Lang, said in the statement. Realty Income, based in Escondido, California, owned 3,681 properties with an occupancy rate of 98.2 percent as of the end of June, according to its latest quarterly report.
Realty Income doesn’t comment on individual acquisitions outside of quarterly conference calls, Vice Chairman Thomas A. Lewis said in an e-mail. Guy Ponticiello, a Jones Lang managing director, and Jim Graham, a spokesman for Walgreen, declined to comment on the price.
By selling and leasing back the buildings, “we can generate capital for reinvestment in our core business, including improvements in our retail drugstores,” Graham said in an e-mail. “We believe that is a more productive and beneficial use of our capital.”
Most of Realty Income’s properties are leased to retailers, including Walgreen, which accounted for 4.1 percent of its revenue as of June 30. Realty Income owned 36 office buildings at the end of the second quarter.