Dispensary property in Fort Collins sells for $1.9M

FORT COLLINS — A property containing a Star Buds cannabis dispensary has been sold for $1.9 million.

The 4,861-square-foot property at 5740 S. College Ave. was purchased by College Ave LLC, an entity registered in Colorado by Las Vegas-based Anderson Business Advisors.

Zach Wright and Brandon Wright of The Boulder Group represented the seller, Quattro Fort Collins LLC, an entity registered by Quattro Development, a real estate development and investment company based in the Chicago suburb of Oak Brook, Illinois.

The property features a long-term triple-net lease with rental increases every five years. The lease is guaranteed by Medicine Man Technologies Inc. (OTCMKTS: SHWZ), a publicly traded company that does business as Schwazze. The vertically integrated cannabis company has approximately 35 dispensaries, six grow facilities and two manufacturing plants.

“Single tenant properties located in Colorado with long-term leases are in high demand amongst net-lease investors and generally sell for extremely low cap rates,” Zach Wright, vice president of The Boulder Group, said in a prepared statement. “Single-tenant cannabis properties trade at a considerable cap-rate discount providing yield-seeking investors enticing opportunities.”

One of the barometers that real estate investors watch is capitalization rates. As defined by Investopedia, “the ‘cap rate’ is calculated by dividing net operating income by the total cost of a property. Expressed as a percentage, the cap rate represents the investment returns from different properties.” Investors use cap rates to compare the returns of different properties. For example, according to J.P. Morgan & Co., a property worth $14 million generating $600,000 of NOI would have a cap rate of 4.3%.

The Boulder Group, headquartered in the Chicago suburb of Wilmette, Illinois, and with an office in Denver, is a 27-year-old boutique investment real estate service firm specializing in single-tenant net lease properties.

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