Ron Miranda is correct - zeros are popular options when an investor is in a 1031 exchange and needs a high LTV to balance the exchange (you must match or exceeds both equity and debt in order for 100% tax deferral). Walgreens and other properties with investment-grade tenants, long-term leases, and NNN or "bondable" lease structures are often able to receive higher LTVs than other investment properties.
Taking a closer look at a "zero" - the investment typically includes Credit Tenant Lease (CTL) financing. With a CTL, the mortgage payments are set to match the lease term - that is debt service coverage can come in much tighter (down to 1.0x in some cases) and hence LTV much higher. This allows an investor to purchase the asset with a minimal, or relatively small amount of equity. With all rent going towards mortgage payments, the outstanding principal is reduced at a faster rate than a traditional mortgage. Repayment of principal is not taxable whereas (unsheltered) cash flow is taxable at ordinary income rates. A CTL is either fully amortizing, or close to, over the lease period. So, while you don't benefit from any cash flow during the holding period, you are able to acquire an asset with minimal equity and then have building paid off by an investment-grade tenant (i.e. low risk) and you end up with a building you own free and clear (or low debt balance) at the end of the term.
Please note, however, that CTL and "zero" structures do create some tax issue, namely "phantom income" - investors are advised to consult with their financial advisors and tax professionals prior to investing in such vehicles.
Nov 1, 2016