THE NNN MARKET

THE NNN MARKET

By: Tom Georges, Associate Director/Investment Sales, The Stan Johnson Company

Tom Georges was interviewed by Jaime Lacky of Northeast Real Estate Business regarding the state of the net lease market.

Single-tenant investment sales volumes have risen steadily since the end of the Great Recession, with 2015 posting a total of $19.3 billion in the retail sector in the U.S., $21.7 billion in office properties and $22 billion in industrial properties, according to a report by Stan Johnson Company. Northeast Real Estate Business recently spoke with Tom Georges, associate director of Investment Sales with Stan Johnson Company’s New York City office, for insight into the net lease market.

Continue reading “THE NNN MARKET”

NET LEASE CAP RATES SET RECORDS

NET LEASE CAP RATES SET RECORDS

Cap rates for single-tenant retail properties hit an all-time low in the first quarter as buyers chase these net lease assets.

Net lease retail investment is hitting new lows, but that’s a sign of its high esteem among investors. During the first quarter, median cap rates for single-tenant retail properties dropped to 6.18 percent, setting a record, according to a report published in April by The Boulder Group. That represents a decline of 7 basis points from the previous quarter and a 22-basis-point decline year over year.
Continue reading “NET LEASE CAP RATES SET RECORDS”

BIG DEMAND FOR NET LEASE PROPERTIES

BIG DEMAND FOR NET LEASE PROPERTIES
By Natalie Dolce

LOS ANGELES—Why are sale-leasebacks and build-to-suit deals so popular? According to Andrew White, CCIM, managing director of the western region at Gladstone Commercial REIT, and a moderator at the recent RealShare Net Lease Westconference here, the answer is because “Cap rate spread to treasury is still high.”stnllogos

The “Opportunities” panel discussed the opportunities in sale-leasebacks and the advantages of build-to-suit developments. Panelist Peter Deltondo, director of Marcus & Millichap Net Leased Retail Group, said that the most aggressive capital he is seeing in this space is from the 1031 buyers. “Most of them are coming out of the apartment sector and they are paying the most aggressive cap rates.” Continue reading “BIG DEMAND FOR NET LEASE PROPERTIES”

A CLOSER LOOK AT NET LEASE INVESTMENT

A CLOSER LOOK AT NET LEASE INVESTMENT

By Natalie Dolce

LOS ANGELES—If a good deal comes along with good yield and credits that you can get comfortable with, whether the deal is in a secondary or tertiary market isn’t the main focus. That was according to panelists on the “Investment and Transaction Outlook panel at RealShare Net Lease West on Thursday.

Continue reading “A CLOSER LOOK AT NET LEASE INVESTMENT”

Net Lease Cap Rates May Increase As Pressure Softens

Net Lease Cap Rates May Increase As Pressure Softens

According to Dominic Cerminara, of Kingsbarn Realty Capital, cap rates in the net lease sector have seen immense pressure, thanks to the extreme demand and competition for product, but that may be changing.

Continue reading “Net Lease Cap Rates May Increase As Pressure Softens”

Why Investors in Net Leased Properties Need Asset Managers

Net leased investments remove a lot of the complexity from individual property investing by focusing on properties which in many ways manage themselves. Still, administrative burdens and complexities exist and to the uninitiated it can be daunting.

Tenants in net leased properties are responsible for most of the onsite maintenance and upkeep of the property. However, there is still a need to collect the rent, pay some bills, keep a set of books, get the tax return prepared, make distributions and prepare for a re-sale when the current tenant’s lease expires, or sooner.

An asset manager can add significant value by dealing with these issues. The cost of an asset manager is relatively low based on the services provided.  An asset manager will handle all of the day to day details associated with the property like collecting rent, paying bills, including the mortgage payment, providing monthly reports, arranging for tax return preparation, and making the required cash distributions. They can also provide guidance and insight as to current market conditions, transaction support and due diligence in the acquisition and disposition of the property itself, and sound advice on the positioning of the property throughout its holding period.

Professional asset managers can provide advice as to when the optimum time to sell is, and whether there are other net leased property opportunities that might provide a better return.

Net leased properties are one of the most passive real estate investments in the market. However, like all investments, proper management is needed to ensure a stable and substantial payoff.

We would be happy to discuss our professional asset management services.

NNN Investment Group Affiliates With KW Commercial

KW Commercial, a division of Keller Williams Realty, Inc., today announced that it will partner with the National NNN Investment Group to offer triple net lease real estate investments to the company’s 73,000 realtors and brokers in the United States and Canada.

KW Commericial

Triple net, also known as NNN (net, net, net), real estate refers to commercial leases where the tenant pays the property taxes, insurance, and maintenance (the three ‘Nets’). Typically, these types of NNN investments are most attractive to long-time apartment property owners and passive investors seeking “hands-off” real estate to provide themselves a long-term and stable income. Many owners sell their current management-intensive properties and purchase an NNN investment as part of a “1031 tax-deferred exchange.”

“Based on current demand, we know that the National NNN Investment Group will significantly contribute to the success of agents throughout Keller Williams Realty,” said Buddy Norman, president of KW Commercial. “Our ultimate objective is to ensure that KW Commercial clients acquire the best quality triple net properties with the fewest surprises and National NNN Investment Group has the experience and track record to make this happen. Keller Williams’ agents can now offer their clients comprehensive end-to-end real estate solutions.”

Managing Director Andrew Barnes, a ten-year veteran of the triple net brokerage business, oversees a constantly changing inventory of available NNN properties at National NNN Investment Group. The group works directly with commercial developers who build retail and industrial properties for the largest US companies. A sampling of tenants includes Walgreens, CVS, Wal-Mart, Publix, Lowes, Sam’s Club, Best Buy, AutoZone, Advance Auto, O’Reilly Auto Parts, KFC, Jack-in-the Box, and Taco Bell.

In today’s changing market, the National NNN Investment Group continues to lead in its area of expertise. Closings this month include the sale of a property NNN leased to Walgreens in Jackson, Mississippi for $3,775,000. A prime location due to a hard corner site and surrounding population density, the property featured excellent assumable financing with a strong tenant credit on a 25-year lease.

“A triple net investment offers an exit from management-intensive real estate into properties that provide long term, passive income” stated Barnes, “This is particularly important to our clients nearing the end of their investment life cycle. For instance, they may have started out with a residential duplex twenty years ago, gradually traded-up along the way, and can now be proud owners of a commercial property leased for 25 years to Walgreens. In many ways, an NNN investment offers features similar to a corporate bond, with the continuing benefits of real estate ownership.”

Prior to joining KW Commercial and the National NNN Investment Group, Barnes was Senior Vice President with the triple net development, investment and brokerage firm Sansome Pacific Properties and prior to that, was Managing Partner and Co-Founder of the San Francisco-based real estate investment firm, Kyodai Holdings. He has been involved in over $575 million in real estate transactions and brings both buy- and sell-side expertise to his brokerage transactions.

Barnes holds an M.B.A from Waseda University in Tokyo and a B.A. from Penn State University. He is fluent in Japanese. He has completed graduate work at the United Nations in New York and undergraduate economics work at Universitat zu Koln in Germany. Additional studies at U.C. Berkeley have included advanced Real Estate Finance and Investment. He is a member of the International Council of Shopping Centers (ICSC), lives in San Francisco with his wife and is an active member of his community.