Yields on
net lease assets remain greater than what's on offer through other investment strategies.
Rahul Sehgal, chief investment office with Inland Private Capital Corp., details how demand remains high for
net lease assets even in the face of higher interest rates.
In closing, I believe that ARCP and Realty Income have one thing in common (investing in
net lease assets), and the differences are most visible as we compare the two book - ends of risk control.
The largest owner / manager of
net lease assets, W. P. Carey's corporate finance focused credit and real estate underwriting process is a constant that has been successfully leveraged across a wide variety of industries and property types.
For a HNW investor pondering single - tenant
net lease assets, Chichester recommends setting clear expectations for investment yields and weighing the risk tolerance associated with those yields.
Pricing on
net lease assets has been at all - time highs for the past two to three years, and many in the industry believe that higher interest rates will likely have a cooling effect on pricing and cap rates.
According to the Boulder Group, net lease properties in the dollar store sector will remain attractive to investors thanks to the higher yields compared with other
net lease assets.
Geographically,
net lease assets in major markets — particularly those in states with no income tax — are generating the most demand from these investors, according to Feeney.
That is much higher than the national asking cap rate of 6.18 percent for retail properties overall in the second quarter, according to The Boulder Group, a brokerage firm that specializes in single - tenant
net lease assets.
The properties are predominantly single - tenant, triple
net lease assets in various cities across the United States.
It is one of the largest employers and one of the largest office tenants and it is pretty insulated from economic cycles,» says Scott Briggs, Esq., an associate director at the Stan Johnson Co., a brokerage specializing in
net lease assets, in Tulsa.
Although
net lease assets are sensitive to changes in interest rates, the sector has not seen a lot of impact so far this year, according to Poretsky.
Other popular options include direct investment in either multi-tenant or single - tenant
net lease assets, according to 45 percent and 36 percent of respondents respectively.
Investors who seek out
net lease assets because they want to reduce their management oversight should avoid investing in government - occupied assets.
In addition, some of the REITs are selling off
their net lease assets to take advantage of aggressive pricing, says Blankstein.
As a result of the slowdown in the first few months of 2017, investment sales volume for
net lease assets will likely be the same as last year, notes Solomon Poretsky, executive vice president of organizational development at commercial real estate advisory firm SVN.
According to data from The Boulder Group, a net lease commercial real estate services firm, retail
net lease assets overall reached the average asking cap rate of 6.07 percent during the quarter.
According to data from The Boulder Group, retail
net lease assets overall reached the average asking cap rate of 6.07 percent during the quarter.
For its part, PrivateBank is looking closely at sponsors and the quality of tenants when lending on
net lease assets.
Volume is up and investors of all stripes are aggressively chasing
net lease assets.
Other top choices for real estate investing include direct investment in multi-tenant commercial real estate assets at 46 percent, direct investment in
net lease assets at 33 percent and investment in publicly - traded REITs at 31 percent.
«As I scan the universe of potential takeout buyers for ARCP, it's becoming increasingly clear that there is just one company capable of acquiring the entire portfolio of
net leased assets.»
Chichester offers this cautionary note about a single - tenant
net lease asset: The property will either be fully occupied or fully vacant.
Not exact matches
We make several adjustments to get from reported
net assets to invested capital because companies can hide
assets and liabilities off of the balance sheet in the form of reserves, operating
leases, deferred compensation, and many other techniques.
«Brookfield Property Partners is a diversified global real estate company that owns, operates and develops one of the largest portfolios of office, retail, multifamily, industrial, hospitality, triple
net lease and self - storage
assets.»
The most notable adjustment was $ 1.4 billion (14 % of reported
net assets) related to operating
leases.
When it manages medical office properties, HCN is more exposed to a downturn in the economy, since
leases on HCN's operating properties are typically with smaller tenants and have shorter terms than the triple
net leases on HCN's investment
assets.
Could the company
lease some of the
net fixed
assets it currently owns?
The statute defines «combination» to include any merger or consolidation with an «interested stockholder,» or any sale,
lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an «interested stockholder» having; (1) an aggregate market value equal to 5 percent or more of the aggregate market value of the
assets of the corporation; (2) an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or (3) representing 10 percent or more of the earning power or
net income of the corporation.
And the way their triple -
net leases work is this: it means the tenant is responsible for
net building insurance,
net common area maintenance, and
net real estate taxes on the
leased asset.
Sometimes you will see what appears to be a pristine balance sheet of a company trading below
net current
asset value, but then come to find out that they have enormous long term
lease commitments which — in my view — should be put on the balance sheet as a liability.
Excluding the
lease obligations, the
net financial
assets alone of $ 37.2 million equate to $ 1.12 per share.
Flat cap rates are not necessarily a bad sign for other types of
assets, but in the
net lease sector, which usually enjoys lower cap rates that other retail property types, little to no cap rate movement might suggest that the advantage is beginning to shift away from the sellers.
Despite potential signs of market headwinds,
net lease specialists are not worried about a significant fall off in demand for convenience store - occupied
assets.
Convenience stores are staple
assets in the portfolios of
net lease and 1031 - exchange investors.
For
net lease investors in particular, this is a key question as cap rates have dropped on core
assets.
USAA Real Estate Co. sold a portfolio of 16 single - tenant
net -
leased assets to an affiliate of The Inland Real Estate Group of Companies Inc., for an undisclosed price.
It's important to clarify that GSA does not sign
net leases, so calling a government
asset a
net lease deal is slightly inaccurate.
As they relate to the Treasury, spreads are still positive, and
net lease remains an attractive income - producing
asset, he notes.
N3 Real Estate (Southlake, TX) owns, manages and develops
net -
leased retail
assets across the United States.
The IRC - IPCC joint venture acquired a portfolio of two free - standing stores
net leased to CVS Pharmacy and one
asset that is
net leased to Walgreens, for a purchase price of $ 17.1 million.
The venture also acquired for $ 23.7 million a second portfolio which includes one
asset that is
net leased to CVS, plus three properties that are
net leased to Walgreens.
DALLAS, TX — HFF announced today that it has sourced a $ 105 million secured credit facility for N3 Real Estate backed by a portfolio of more than 50
net -
leased retail
assets.
An analysis of
leasing issues Ralston says that creditworthy companies choose to
lease for three key reasons: First, a
net lease can provide a company with the ability to match a long - term real estate
asset with a long - term liability.
In a separate deal, Marcus & Millichap arranged the sale of two Rite Aid
net -
leased assets in Southern California.
STORE Capital bought the restaurants from O'Charley's Inc. and
leased the
assets back under long - term triple -
net leases.
But with the economy in a recession and a number of retailers going out of business, finance companies that do
net lease deals have turned to other
asset classes such as office and industrial buildings, even hotels.
However, the plan wouldn't aid investment in
asset classes with longer
lease terms, including healthcare,
net lease and retail, given the bond - like nature of these categories, he notes.
Consolidation has left about a half dozen non-specialty REITs involved in commercial
net lease — this at a time when this type of financing appeals to companies eager to monetize
assets.
By and large,
net lease properties are magnets for HNW investors because they're viewed as safe, recession - proof
assets that preserve cash flow and yield.