The store-closing environment isn’t getting any prettier. There have been  store 8,051 closures announced by retailers so far this year, according to Coresight Research, in contrast to only 3,401 openings.

That news isn’t keeping Realty Income away from purchasing a $1.25-billion portfolio of 454 single-tenant retail assets from CIM Real Estate Finance Trust. The deal, expected to close by the end of the year, is expected to result in a seven-percent capitalization rate.

The deal is prompting Realty Income’s management to up its acquisition guidance for the year to between $3.25 billion and $3.5 billion, from $2 billion to $2.5 billion. The portfolio totals 5.1 million square feet, with most of it in California and Texas.

Dollar General accounts for the largest tenant, with 145 units, followed by Dollar Tree/Family Dollar (75 locations), and Walgreens (37 stores). Dollar General is responsible for most of the rent, at 15.8 percent, with Walgreens at 14.8 percent and Family Dollar/Family Tree’s 8.7 percent.

Though the CIM deal is sizable, it’s small compared to the 5,900 retail assets owned in total by Realty Income, which reported an 11.1-percent revenue increase in the second quarter compared to the same year-ago period.

But now back to those store closings. The 8,051 is on track to double 2018’s total of 5,844 closed stores.

The news out of Sears, for one, isn’t getting any better. Management announced that it is closing 77 more units, most of which are said to be Kmarts, and plans to sell its headquarters, in Hoffman Estates, Ill. 

Party City also reported a downer. It is increasing its planned store closures for the year by 10 units to a total of 55 locations. The company’s chief executive said that higher helium costs and a shortage were among the factors to blame for the closures.

Last month women’s plus-sized apparel retailer Avenue announced that it is filing for Chapter 11 bankruptcy protection and closing all of its 222 units. There were reportedly as many as 433 Avenue stores in 2012.

There is obviously a major upheaval happening in retail right now. For several years many of the one-category chains that can’t find a way to innovate in a way that connects with consumers are closing due to competition from online sellers and mass-merchandise stores (Sears being an exception).

But on the other end of the spectrum, single-tenant net lease assets that sell necessity items are obviously in investors’ favor due to their stable performance. We’ll continue to see which chains thrive and which can’t adapt to change.

About GRS Group

GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.

Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance.  We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.