Archive for NNN

Oct
11

NNNet Advisors Releases 3Q Net Leased Report

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nnnet-advisors-2016The modest increase in cap rates from Q1’s all time lows have held steady over the past two quarters. Buyers continue to take advantage of historically low interest rates while sellers cash in during this continued low cap rate environment with the hopes of rebalancing their portfolios.

We expect to see more of the same as we move into the final quarter of the year. While an increase in interest rates is eminent, the economy is still showing signs that it is not able to withstand anything drastic in the short run. Low interest rates continue to motivate investors to remain bullish on net lease opportunities, as there is still a spread to be achieved between current interest rates and cap rates, especially when utilizing shorter term debt.

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Mar
01

2016 Net Lease Market Forecast by Calkain (video)

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Oct
27

Net Lease Drug Store Cap Rates Shatter Records

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percentage downCap rates for single tenant CVS, Rite Aid and Walgreens properties reached a new historic low in the net lease drug store sector in the third quarter of 2015.

Cap rates continued to decline as investors flock to the net lease space’s cornerstone asset, drug stores. With historically low cap rates, the drug store property supply has increased drastically by over 20% as owners attempt to take advantage of unprecedented high values. While overall cap rate levels experienced compression, short term leased Rite Aid properties with 5-9 years of lease term remaining had the greatest cap rate compression of 85 basis points in the third quarter of 2015. New construction CVS properties experienced the second greatest compression of 50 basis points to a 5% cap rate, the same level for new construction Walgreens assets. These levels can be attributed to the historically low interest rate environment coupled with high demand amongst 1031 exchange buyers for long term leased properties in a market constrained by limited expansion plans for drug stores tenants.

With cap rates for Walgreens and CVS at all-time low levels, the ratio of long term leased drug store properties (20 years or more) to the total supply has decreased when compared to the third quarter of 2014 and total overall supply of long term leased drug stores declined by 27% in the same time period.

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Oct
22

Builders FirstSource in Columbia Sold for $5.2 Million

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builders firstsource blythewoodThe Royston Group has completed the sale of a single tenant, triple net lease industrial facility. The 106,000 square foot site, located in Blythewood, South Carolina, sold for $5.2 million. Built in 2005, the property sits on 22.01 acres of land which is leased to building supply company Builders FirstSource.

The Royston Group’s Greg Cortese and Rob Sutton represented the seller in the transaction. The buyer selected this property due to the 15 Year NNN lease and the strong company credit in Builders FirstSource. Builders Firstsource has been operating at the site for over 10 years giving the company valuable access to the region’s growing residential home development . The buyer is private real estate investor based in northeast and the seller is a family real estate company based in California.

“The company credit, the site access to residential growth markets and the long term NNN lease made this site a very valuable and stable net lease investment.” said Sutton.

Additional property information can be found at the expired Loopnet listing.

Categories : Columbia, Uncategorized
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Oct
16

Marcus & Millichap Releases Net Lease Report

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Single-tenant retailers’ expansion plans continue as new households form amid an improving economic outlook despite the industry uncertainty surrounding minimum-wage legislation. Upticks in household formation and retail sales have encouraged retailers to open new locations and use e-commerce strategies to engage their customers more often. The continued rise of Internet shopping has also pushed more traditional retailers such as Wal-Mart to off er quicker shipping times and in-store fulfi llment, which shoppers have cheered. Retail sales will continue to climb through next year. Plummeting oil prices have provided consumers more spending power, although the current trend is to shore up savings rather than increase consumption. Yet, recent retail sales reports suggest this behavior is reversing; retail sales at restaurants and bars accelerated well above the national average. However, some retailers have expressed caution about expanding quickly as many states and municipalities have already taken steps to raise the minimum wage, leading several employers to follow suit. How this might impact their bottom line is still unknown. Viewed holistically, retailer demand will remain well ahead of expected supply increases this year as net absorption nearly doubles planned completions. As a result, asking rents are expected to climb in the low single digits.

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Feb
11

NC 2nd Most Active State for Net Leased Properties

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Calkain logoAccording to Calkain Companies, 2014 ended with a flurry of activity as people rushed to close deals by year end. Overall we saw cap rates slide downward from 6.78% in November to 6.51% in December. The second half of 2014 overall, saw cap rates decrease month after month and we expect this trend to continue into the start of 2015. However, this may change before the summer due to a rise in interest rates. Investors will continue to look at secondary and tertiary markets more for net lease properties due to the lack of current supply in core markets. Investors will also continue to increase their risk to achieve higher yields. The first month of 2015 saw another drop in net lease cap rates from 6.51% in December to 6.33% in January.

The most active states for net lease activity from the past month was California (1st), North Carolina (2nd) and Florida and Arizona (joint 3rd). On January 22nd, 2015, Family Dollar shareholders voted to approve the retailer’s $8.5 billion merger with Dollar Tree, leaving the company’s unwanted suitor, Dollar General, on the losing side. The deal could close in March of this year. There will be a number of store closings from the merger, but new dollar stores will open at the same time.

SOURCE

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Dec
03

Drug Store Cap Rates Hit Another Low

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Cap rates for net lease properties have been falling for quite some time, often hitting historic lows, but investors find few sectors as appealing as drug stores. And according to the most recent report from the Boulder Group, a commercial real estate services firm located in suburban Northbrook, IL, in the third quarter of this year cap rates for many top drug store brands fell again.

“Walgreens cap rates remained stable at their previously reached historic low level in the first quarter of 2014,” according to the new report. But cap rates for CVS and Rite Aid properties sank 15 bps and 35 bps, respectively, since hitting their own historic lows in the first quarter. The Walgreens rate now stands at 5.6%, with CVS at 5.75% and Rite Aid at 7.4%. 1031 exchange buyers and private investors remain the primary buyers.

“Investors are attracted to these properties partly because they are one of the few opportunities with tenants that sign leases of 20 years or more,” Randy Blankstein, president of Boulder, told GlobeSt.com. In fact, although the overall rate for Walgreens properties remained stable, rates for Walgreens properties with more than 20 years of lease remaining compressed by 20 bps to 5.3%.

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Oct
14

NNNet Advisors Releases Single Tenant Net Lease Report

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NNNet Advisors Releases the Q3 2014 Single Tenant Net Lease Report. Click on the report below to download it.

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Oct
01

Net Lease Cap Rates Hold Steady at Historic Lows

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Cap rates for the single-tenant net-leased retail sector remained unchanged in the third quarter of 2014, at a historic low rate of 6.5 percent. Cap rates for the office sector compressed by 37 basis points to 7.4 percent, while those in the industrial sector rose by a mere three basis points to 8 percent. There were no major contributing factors to the leveling of retail cap rates, as supply and demand remained near levels from the previous quarter. During the third quarter, the 10-year Treasury yield dropped to its lowest point of the year (2.55 percent) in late August. However, by the end of the quarter, Treasury rates had risen, ending near levels similar to the end of the second quarter. With little movement in the capital markets, retail cap rates have plateaued, as buyers cannot meet acceptable return thresholds at lower cap rates due to the low interest-rate environment.

During the third quarter, the supply of office and industrial properties increased significantly — by 30 and 21 percent, respectively. Owners of these assets have attempted to take advantage of the current low retail cap rates by enticing investors with higher yields offered by office and industrial properties. The supply of retail properties increased by only 3.1 percent between the second and third quarters, as new construction remains limited with the exception of the dollar-store sector.

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Sep
04

Calkain: NNN Cap Rates Dropped in August

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Overall cap rates dropped in August to an average of 6.58%. The sectors with the lowest cap rate averages were Banks (5.35%) and Pharmacies (6.29%). Dollar Stores had the highest average at 7.61%. That said, well located Dollar Stores with long term leases were seen trading in the mid to low 6 cap range. Typically deal flow slows somewhat in summer as people take vacations etc. The fourth quarter on the other hand is marked by intense deal flow as people seek to get exchanges completed before the year ends.

Net lease properties continue to be a highly desired asset and a good play for any investor with the requisite capital.

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Aug
11

Calkain & Chandan Economics Release NNN Report

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Lofty risk-adjusted returns drove investors to well-tenanted net lease assets during the Great Recession. As the economic outlook and real estate markets have strengthened, the demand has remained robust even in the face of the Federal Reserve’s announcement in May 2013 that it would taper its quantitative easing measures. While real estate sales in March 2014 were 5.2% lower year-over-year, transaction volume in the first quarter of 2014 was up 15% over the first quarter of 2013.

Large sale-leaseback transactions have headlined the triple net market in the end of 2013 and first half of 2014. Other institutional investors have increased their exposure to net lease assets as well, seeking higher yields than fixed income securities with a similar risk profile. Recent CMBS transactions have also seen an uptick in single-tenant triple net collateral. More and more, the net lease sector is experiencing a secular shift toward becoming a significant component of general commercial real estate portfolios.

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Aug
08

Boulder Group: NNN Quick Service Restaurant Report Released

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The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the activity in the National Net Lease Quick Service Restaurant (QSR) Market.

Highlights from the report are as follows:

  • QSR properties are commanding a 50 basis point premium over the retail net lease market
  • McDonald’s ground leases represent the lowest cap rates in the sector
  • Cap rates for corporately guaranteed properties are asking a 50 basis point premium over franchisee guaranteed properties

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Apr
03

A Net Lease Bubble? Not for Awhile Yet

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With cap rates for core assets dipping down to levels last seen in 2007, it’s legitimate to question whether net lease is back to a bubble. CGA Capital Corp. principal Kyle Gore, moderating the “Capital Markets Update” panel at Wednesday’s RealShare Net Lease conference here, did just that.

If a bubble is forming, we’re not likely to see it burst anytime soon, in the view of Kenneth Zakin, senior managing director of NGKF Capital Markets. Even if interest rates rise, as many industry members believe they will sooner or later, the net lease market still has several good years ahead of it. “People still want to buy net lease,” said Zakin. “The capital isn’t going away.”

ARC Properties Trust’s James Steuterman, a panelist in a later discussion, similarly doesn’t see interest rate increases doing much to slow momentum. Although there have been some bumps in rates over the past six months, “the capital flow has been so strong that you haven’t really seen it in cap rates yet,” he noted.

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Mar
19

Net-Leased Educational Buildings Hot Commodity

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Net-leased properties in the educational realm continue trading hands. The latest example is a duo of Virginia College properties. Virginia College is a chain of private, for-profit, nationally accredited post-secondary institutions located primarily in the southeastern United States.

Although these commercial real estate assets haven’t sold yet, Marcus & Millichap has the exclusively listing on the single-tenant net leased properties. The list price for the 102,098-square-foot Macon, GA property is $10.3 million, which equates to $101 per square foot. The 90,982-square-foot Baton Rouge, LA property is listed for $12 million, which represents $132 per square foot.

Marc E. Strauss, first vice president investments, and Richard Moravek and Aaron O’Connor, associates, all in M&M’s Fort Lauderdale, FL office, are representing the seller. William Hoffpauir, senior associate in M&M’s Lafayette, LA office, is the firm’s broker of record in Louisiana. Michael J. Fasano, vice president and regional manager in Atlanta, is the firm’s broker of record in Georgia.

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Feb
18

Single Tenant Net Leased Demand Increases

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The marketplace is currently seeing increased investor demand for single-tenant, net-leased properties with shorter terms remaining on their leases. The trend over the past few years has been remarkable, for leases with less than 10 years, and sometimes less than five years remaining.

Stan Johnson Co. dispositions of single-tenant, net-leased buildings with less than 10 years on the lease increased by 25% in 2009-10; and a remarkable 97.14% increase in 2010-11. In 2011-12, demand rose another 84%, and the 2013 increase is on track to continue the trend. Stan Johnson Company properties with less than five years remaining on the lease had increases that were even more spectacular: 2009-10, 16.67%; 2010-11, 114.29%; and 2011-12, 120%.

These huge jumps are due, in part, to a lack of new properties becoming available since the economic downturn in 2008. These conditions have driven cap rates down, obliging investors to take greater risk.

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