Dairy Queen Sale Leaseback Achieves Record Low Cap Rate for County

A Dairy Queen Drive Thru at 1179 E. Main Street in Alice changed hands on June 25, 2025 in a sale leaseback structure that locked in a 20 year absolute triple net lease. The single tenant building is 2,608 square feet on a 0.61 acre parcel. Built in 1983 and renovated in 2015, the site will continue to be operated by the franchisee under a lease that includes four five year renewal options and rent escalations of 2.0 percent every five years. The buyer was identified as a California based trust.

The deal closed at an initial cap rate of 5.98 percent, described by the parties as a sub 6 percent result and a record low cap rate for Dairy Queen transactions in Texas during 2025. That pricing reflects investor appetite for long term, credit anchored net leased retail properties even as local commercial markets adjust to broader economic conditions. Primary attractions cited for the site included its heavy traffic counts at approximately 20,000 vehicles per day and its proximity to large local employers and institutions such as Dixie Iron Works, Forbes Energy, CHRISTUS Spohn Hospital Alice and area schools, which together support steady customer flow.

For local residents and officials the transaction has several practical implications. The franchisee, F and P Brands, will continue operating the restaurant on site, preserving jobs and consumer access to a high visibility location on East Main Street. The infusion of out of area capital into Jim Wells County real estate may put upward pressure on valuations for similar single tenant retail parcels, which can affect property tax assessments and development incentives over time. Because the sale was structured as an absolute triple net lease, most operating and maintenance responsibilities rest with the tenant, limiting immediate changes to municipal service obligations.

Hanley Investment Group handled the marketing and sale as the broker of record. F and P Brands remains the operating franchisee and owner group under the lease arrangement. The transaction illustrates a broader trend of investor interest in credit tenant net leased retail assets and demonstrates how a locally important commercial site can attract institutional capital while keeping daily operations anchored in the community.