The 15-year lease that wasn't: what 250 Starbucks closures should teach 1031 buyers

Somewhere between selling an apartment complex or a family ranch and the IRS's 45-day identification deadline, thousands of Texas investors make the same phone call every year. Find me a single-tenant net lease with corporate credit. I just want to collect the coupon.

The target is almost always a freestanding Starbucks with a drive-thru. The offering memorandum is glossy. Investment-grade credit. Ten to fifteen years of primary term. Few landlord obligations. Buyers pay aggressive cap rates for that perceived safety.

Then corporate strategy changes.

In September, Starbucks announced it would close roughly 250 North American locations — about 1% of its 18,000-store fleet, and the second such round in two years. The company disclosed approximately $300 million in restructuring charges, of which about $200 million is cash, going primarily to lease exits and employee separation.

Read that again. A corporate tenant told its shareholders, in a regulatory filing, what it has budgeted to stop paying landlords.

The term remaining is the part nobody expected. The CRE data platform DealGround ran the September closure list against its own database of offering memoranda. They found 51 single-tenant Starbucks properties they'd previously captured, 50 with enough detail to determine remaining lease term.

Forty-eight of those 50 — 96% — had more than five years left. Nine had more than ten. The outliers are the part worth sitting with. Kearny Mesa in San Diego: roughly 17 years remaining. Tallahassee: 16.6. St. Louis: 14.1. Darlington, South Carolina: 14. San Bernardino: 13.8.

These are not tired inline locations aging out of their terms. Several are recent drive-thru builds from 2024 and 2025, sold to private investors on fresh long-term leases.

One methodological note that makes this more relevant, not less: the sample only includes properties where DealGround already had an offering memorandum — meaning properties that were marketed and sold as net-lease investments. It is not a random slice of 250 closures. It is a slice of exactly the deals that end up in private investors' hands. Possibly yours.

Term is not exposure. The fatal assumption is that lease term equals guaranteed income. Twelve years left on a $140,000 rent means the tenant owes you $1.68 million. It usually doesn't.

Corporate tenants don't sign the lease you'd sign. Their legal teams negotiate custom forms with exit ramps — termination options, go-dark rights, and damages provisions capping what a landlord can actually collect.

DealGround's Alex Esber pulled the leases on two stores in this closure round. One limits Starbucks' exposure for lost base rent and additional rent to two years. The other, to four. Two documents is an anecdote, not a dataset. But set an anecdote like that against stores closing with fourteen and seventeen years remaining, and the question answers itself: what does my lease actually say?

If corporate decides the operating losses exceed the capped payout, they write the check, hand you the keys, and leave. The cap rate you underwrote becomes a zero-income asset with taxes, insurance, and debt service still due on the first.

The asymmetry is the point. Starbucks is managing 250 closures as a portfolio. Real estate committees, financial models, attorneys running simultaneous negotiations. They know what's in their other leases. They know what settlements other landlords have accepted. You are one investor with one property. You don't know what they offered the owner two states over. You may have a loan maturing in three years and a market you don't live in. They know that asymmetry exists. It is priced into what they offer you.

You never buy the lease. You buy the dirt. Corporate credit is a shock absorber, not an insurance policy. When we work with clients placing 1031 proceeds, the first rule is to underwrite the property as though the tenant goes dark tomorrow.

What is the dark residual value? If the tenant leaves, can another drive-thru user take the shell without six figures of re-permitting and tenant improvements? Some pads convert easily. Some don't.

What is replacement rent? Credit tenants often pay above market to secure a flagship corner. If your lease sits well above what a vacant pad commands locally, you didn't buy a strong property with a great tenant. You bought an average property with a rent subsidy that has an expiration date.

What does the default clause actually say? Acceleration rights, or capped exposure? Continuous-operation covenant, or can they go dark and pay while they wait you out?

If a broker's analysis begins and ends with the credit rating and the years on the flyer, they are not underwriting real estate. They are selling paper. When the music stops, paper doesn't pay the note. The dirt does.

If you're working against a 45-day clock, the identification window is where most exchanges fail — and a rushed net-lease purchase is one of the more expensive ways to fail it.

General observations from our commercial transaction experience. Not investment, tax, or legal advice, and not a recommendation regarding any property, tenant, or security. Lease terms vary materially by document — no general description substitutes for reading the actual lease with qualified counsel. Consult your CPA and a real estate attorney before placing exchange proceeds.