Thursday, October 27, 2011
NNN Lease Market: New Tricks for NNN Lease Mall Investor
NNN Lease Market: New Tricks for NNN Lease Mall Investor: NNN Lease Market News Goodbye to Circuit Citys and Old Navys; Hello, Gun Ranges, Aquariums, Go-Carts Sobered by store closings and the r...
New Tricks for NNN Lease Mall Investor
NNN Lease Market News
Goodbye to Circuit Citys and Old Navys; Hello, Gun Ranges, Aquariums, Go-Carts
Mall giant Simon Property Group Inc. opened an aquarium in July at its Grapevine Mills mall near Dallas. Real-estate brokerage Jones Lang LaSalle Inc. put a fencing academy in a former Old Navy store in Florida's Tallahassee Mall, and a community theater on the lower level of a former Boscov's store in Harrisburg,Pa.
Nontraditional tenants, in many cases, though, don't pay as high a rent as major chains would pay. What's more, nonretail tenants often don't pay percentage rents, a form of bonus rent that retailers pay from a small percentage of their sales when they exceed a certain threshold.
Even top performing mall companies—like Simon, which reported a 19% rise in earnings Tuesday—are looking at restaurants, entertainment and other nonretail uses as a hedge against the drain from online shopping. Glimcher Realty Trust purposefully filled 25% of its upscale Scottsdale Quarter mall near Phoenix with restaurants such as Stingray Sushi and services like Drybar, a salon that specializes in blow drying women's hair. "She can't go out to lunch and have a salad and a glass of wine with her girlfriends online," Glimcher Chairman and CEO Michael Glimcher said, referring to the mall industry's coveted female shoppers.
Struggling shopping centers, like the Tallahassee and Harrisburg malls, meanwhile, are signing nonretail tenants because no one else is lining up for the space. But adding a tenant with limited potential to bring shoppers to the rest of the center—like classrooms or a church—often isn't popular with existing tenants. The move can be seen as giving up on the center as a retail venue.
Wednesday, October 26, 2011
Two Triple Net Lease (NNN) Dollar General Sold
NNN Lease Market News
Some of these are even so-called triple net lease (NNN) properties wherein the tenant also pays for maintenance, insurance and taxes on the property. Opportunities for these buys are increasing and investors are increasing their holdings as they begin to realize the benefits of these properties as safe long-term real estate investments.
Two net lease investment properties occupied by Dollar General (NYSE: DG) in the Virginia towns of Madison and Ferrum have sold for $2.54 million.
The two properties were recently developed as part of Dollar General's built-to-suit program, and the stores have brand new 15-year triple net leases.
Calkain's Andrew Fallon, Associate, facilitated the transaction, providing exclusive representation to the Seller, who developed the assets. The purchaser was a regional real estate development and management company based in the Northeast.
"The dollar store companies, including Dollar General, are relocating to free-standing stores in existing markets and opening new stores in new markets," said Fallon.
Investors are now looking to single tenant net lease properties to produce steady profits as the commercial real estate market attempts a recovery from the recession. Net lease properties trend toward higher-quality assets and creditworthy renters who often agree to graduated increases in rent over long periods of time.
Some of these are even so-called triple net lease (NNN) properties wherein the tenant also pays for maintenance, insurance and taxes on the property. Opportunities for these buys are increasing and investors are increasing their holdings as they begin to realize the benefits of these properties as safe long-term real estate investments.
Dollar General Corporation is the nation's largest small-box discount retailer. We make shopping for everyday needs simpler and hassle-free by offering a carefully edited assortment of the most popular brands at low everyday prices in small, convenient locations. Dollar General ranks among the largest retailers of top-quality brands made by America's most-trusted manufacturers, such as Procter & Gamble, Kimberly Clark, Unilever, Kellogg's, General Mills and Nabisco.
Friday, October 21, 2011
D.C. Worst Performance for Lease Office Market
The Washington region's office market in the third quarter registered its worst performance since late 2009, a sharp contrast to a boom the area saw throughout 2010.Now owners are adjusting to the likelihood that the public sector and its sprawling support system in the private sector will halt its growth in coming years—or even shrink.
"For us, it'll mean a relatively flat market, which we're not used to," said Douglas Donatelli, chief executive of First Potomac Realty Trust, a large office landlord in the region. "We're used to a market that absorbs space."
The federal government is by far the largest occupier of space in the region. The General Services Administration alone, which handles the bulk of federal leasing, accounts for 15.3% of the privately owned office market, according to brokerage CBRE Group Inc. Washington, by contrast, was the envy of landlords in most other cities through much of the recovery. Even when times were rough after the economy turned in 2008, Washington managed to escape with fewer scars than most other cities—likely aided by increased federal spending—and then roared back to be the best-performing office market in 2010.
In the first half of the year, investors were paying up for office buildings at values above those reached in the market's prior peak of 2007. For example, Beacon Capital Partners sold a 680,000-square-foot office building known as Market Square to Wells Real Estate Investment Trust II in March for a record $905 a square foot. The recovery in the Washington D.C. metro office market is expected to continue at a slow pace throughout the remainder of 2011 and into 2012.
Monday, October 10, 2011
what you Need to know about (NNN) Net Leased Properties
NNN Lease Market News
(NNN) Net Lease 101
Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, (NNN) net leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
Here's what you need to know about single-tenant, (NNN) net leased properties:
What is a single-tenant, (NNN) net leased investment?
A single-tenant, (NNN) net-leased investment is typically a freestanding office, retail, or industrial building that is leased and occupied by one user or one company. Typically the tenant has committed to a long-term lease - usually longer than 10 years, and as long as 25 years with increasing rent over the lease term.
What is a (NNN) net lease?
There are different types of leases for commercial property in the U.S. The two most common leases are full-service leases and net leases.
A full-service lease means that the tenant is paying one base amount to the landlord/owner to occupy the space and the owner pays all the expenses related to the building including insurance and property taxes. With a full-service lease, the landlord/owner also is responsible for all maintenance related to the building. For example, if a thunderstorm damages the roof, the landlord/owner must pay for the repairs.
In comparison, a tenant with a (NNN) net lease is responsible for paying rent plus some or all of the operating expenses of the building such as taxes, insurance premiums, repairs, and utilities. Depending on how the leases are structured, they can be net-net leases or NNN-net-leases. Specifically, in the case of a (NNN) net lease, also known as NNN leases, the tenant agrees to pay all of the building's operating expenses, real estate taxes and insurance.
How are single-tenant, net leased investments different from multi-tenant buildings?
Multi-tenant buildings have more than one tenant, and as a result, owners and landlords must juggle multiple leases that begin and end at different times. These leases are rarely longer than seven years. That means that the building's financial performance is vulnerable to the ups and downs of the market.
Many (NNN) net-lease investors have previously owned other types of real estate but are looking for an investment that requires less maintenance and supervision. For example, many apartment investors end up selling their high-maintenance properties and then reinvesting the sale proceeds in single-tenant, net-leased retail properties, as do many land owners who have previously never received any income or tax benefits from their property.
Who can invest in single-tenant, net leased properties?
Net leased properties are appealing to a wide variety of buyers, from high net worth individuals to partnerships to large institutional investors like real estate investment trusts, life insurance companies and pension funds. (NNN) Net leased properties also are very attractive to investors who need to do 1031 tax-deferred exchanges, or 1031 exchanges for short.
What are the benefits of investing in single-tenant, (NNN) net leased properties?
Many people consider single-tenant, net-leased properties as bond-like investments because of their stable, predictable returns. Because tenants commit to long-term leases, there's very little re-leasing risk. Moreover, single-tenant, net-leased investments can be tailored to an investor's risk-reward expectations by choosing tenants with different credit profiles. For example, some tenants are rated by national credit ratings agencies while other tenants have only their previous financial performance to recommend them.
What are the risks related to investing in single-tenant, net-leased properties?
While there are very few risks related to investing in single-tenant, net leased properties, tenants with non-investment grade credit profiles offer higher levels of risk. But that risk typically provides higher returns as well. And investors always need to think about the "re-leaseability" of a property if the net-tenant were to vacate the space.
How are single-tenant, (NNN) net leased assets valued?
Unlike traditional real estate investments whose valued is determined exclusively by the real estate itself, a single-tenant, net leased property's value is determined by a combination of factors including the tenant's credit, the length of the lease and rental escalations over the term, and, last but not least, the real estate. In markets where the real estate experiences wide valuation swings, a single-tenant, net-leased property will maintain its value because of its bond-like, long-term lease and the credit tenant guaranty for the lease.
When is the best time to invest in a single-tenant, (NNN) net lease property?
Net-leased properties are like all-weather tires. They are good investments in both good and bad economic times and in hot and cold real estate markets. Here's why: a single-tenant net lease is guaranteed by a long-term lease at pre-set rental rates. As an owner, you know exactly who will be a tenant in your building, how long that tenant will be there and exactly how much rent they will pay you. That means you will derive a steady income from your investment, regardless of how the economy or real estate market is performing.
http://www.calkian.com/
(NNN) Net Lease 101
Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, (NNN) net leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
Here's what you need to know about single-tenant, (NNN) net leased properties:
What is a single-tenant, (NNN) net leased investment?
A single-tenant, (NNN) net-leased investment is typically a freestanding office, retail, or industrial building that is leased and occupied by one user or one company. Typically the tenant has committed to a long-term lease - usually longer than 10 years, and as long as 25 years with increasing rent over the lease term.
What is a (NNN) net lease?
There are different types of leases for commercial property in the U.S. The two most common leases are full-service leases and net leases.
A full-service lease means that the tenant is paying one base amount to the landlord/owner to occupy the space and the owner pays all the expenses related to the building including insurance and property taxes. With a full-service lease, the landlord/owner also is responsible for all maintenance related to the building. For example, if a thunderstorm damages the roof, the landlord/owner must pay for the repairs.
In comparison, a tenant with a (NNN) net lease is responsible for paying rent plus some or all of the operating expenses of the building such as taxes, insurance premiums, repairs, and utilities. Depending on how the leases are structured, they can be net-net leases or NNN-net-leases. Specifically, in the case of a (NNN) net lease, also known as NNN leases, the tenant agrees to pay all of the building's operating expenses, real estate taxes and insurance.
How are single-tenant, net leased investments different from multi-tenant buildings?
Multi-tenant buildings have more than one tenant, and as a result, owners and landlords must juggle multiple leases that begin and end at different times. These leases are rarely longer than seven years. That means that the building's financial performance is vulnerable to the ups and downs of the market.
Many (NNN) net-lease investors have previously owned other types of real estate but are looking for an investment that requires less maintenance and supervision. For example, many apartment investors end up selling their high-maintenance properties and then reinvesting the sale proceeds in single-tenant, net-leased retail properties, as do many land owners who have previously never received any income or tax benefits from their property.
Who can invest in single-tenant, net leased properties?
Net leased properties are appealing to a wide variety of buyers, from high net worth individuals to partnerships to large institutional investors like real estate investment trusts, life insurance companies and pension funds. (NNN) Net leased properties also are very attractive to investors who need to do 1031 tax-deferred exchanges, or 1031 exchanges for short.
What are the benefits of investing in single-tenant, (NNN) net leased properties?
Many people consider single-tenant, net-leased properties as bond-like investments because of their stable, predictable returns. Because tenants commit to long-term leases, there's very little re-leasing risk. Moreover, single-tenant, net-leased investments can be tailored to an investor's risk-reward expectations by choosing tenants with different credit profiles. For example, some tenants are rated by national credit ratings agencies while other tenants have only their previous financial performance to recommend them.
What are the risks related to investing in single-tenant, net-leased properties?
While there are very few risks related to investing in single-tenant, net leased properties, tenants with non-investment grade credit profiles offer higher levels of risk. But that risk typically provides higher returns as well. And investors always need to think about the "re-leaseability" of a property if the net-tenant were to vacate the space.
How are single-tenant, (NNN) net leased assets valued?
Unlike traditional real estate investments whose valued is determined exclusively by the real estate itself, a single-tenant, net leased property's value is determined by a combination of factors including the tenant's credit, the length of the lease and rental escalations over the term, and, last but not least, the real estate. In markets where the real estate experiences wide valuation swings, a single-tenant, net-leased property will maintain its value because of its bond-like, long-term lease and the credit tenant guaranty for the lease.
When is the best time to invest in a single-tenant, (NNN) net lease property?
Net-leased properties are like all-weather tires. They are good investments in both good and bad economic times and in hot and cold real estate markets. Here's why: a single-tenant net lease is guaranteed by a long-term lease at pre-set rental rates. As an owner, you know exactly who will be a tenant in your building, how long that tenant will be there and exactly how much rent they will pay you. That means you will derive a steady income from your investment, regardless of how the economy or real estate market is performing.
http://www.calkian.com/
Thursday, October 6, 2011
Discount Store Family Dollar Has a 10-year lease in Riverside,CA
NNN Lease Market News
Discount store Family Dollar has a 10-year lease on a location on Van Buren Boulevard in Riverside, according to a statement from the commercial real estate company that helped put the deal together.Family Dollar will take up a 10,000-square-foot site at Van Buren Plaza, on Riverside's west side. They are leasing the store from Tustin-based Kensington Real Estate Group.
A Hesperia shopping center anchored by a Fresh & Easy market has been sold to an Irvine-based real estate investment trust for $13.5 million, according to a statement.
The 52,000-square-foot Topaz Marketplace, in the 14100 block of Main Street, is three years old and 100 percent occupied. Other tenants include DeVita Dialysis, Wood Grill Buffet and Metro PCS.
The price, $253 per square foot, is considered one of the healthiest of the year for retail properties with a price tag above $10 million, according to Faris Lee Investments, a commercial real estate firm that specializes in retail deals.
Investors Lack Confidence in Net Lease Market
NNN Lease Market News
Investors Lack Confidence in Net Lease Market
Even the CMBS markets have cooled. Where there were about $20 billion in CMBS loans completed by the second quarter and there were thoughts the year could hit $50 billion, now respondents almost unanimously agreed that there will be less than $40 billion in CMBS for the year.
More than 70 percent of 280 surveyed real estate CEOs, COOs and CFOs said they have a negative, or "bearish," outlook for the commercial real estate sector over the next 12 months. The poll, cited by Reuters, was conducted by global law firm DLA Piper in connection with its Global Real Estate Summit held today in Chicago.
A lack of confidence in the Obama administration, the general gridlock in Washington and poor job growth were reasons behind the pessimism. Though sales have increased this year, and prices are up 12.5 percent from their lows in April, investors worry that the Net Lease market will lose more footing.
"What you now see is a growing degree of uncertainty, and uncertainty begins to push money to the sidelines because people are much more reluctant to make a decision," said Jay Epstien, a partner with DLA Piper.
The 29.4 percent of respondents who were bullish on the Net lease market cited increased opportunity for profit as a reason to be optimistic. Even the bears conceded on that point. Seventy-four percent said they did not expect interest rates to change, 67 percent felt cap rates would remain unchanged, and 24 percent believed they would rise.
However financing for deals will be hard to come by, according to about 90 percent of respondents. They expect the commercial mortgage-backed securities market to slow over the next year. Already, just $26.7 billion worth of securities have been issued thus far in 2011, down from $243.3 billion in all of 2007.
Monday, October 3, 2011
NNN Lease Market: Barclays PLC and Bank of America Corp Selling Thei...
NNN Lease Market: Barclays PLC and Bank of America Corp Selling Thei...: NNN Lease Market News Two Archstone Owners Decide to Sell Their Stakes After months of wrangling with the estate of Lehman Brothers Holding...
Barclays PLC and Bank of America Corp Selling Their Stakes
NNN Lease Market News
Two Archstone Owners Decide to Sell Their Stakes
After months of wrangling with the estate of Lehman Brothers Holdings Inc. over how to unwind apartment giant Archstone, co-owners Barclays PLC and Bank of America Corp. have decided to wash their hands of the deal.Unable to reach a consensus with Lehman on a plan to sell the entire company, the two banks are now trying to sell their stakes, which total 53%, according to people familiar with the matter. The banks' combined equity stakes in the company are likely worth between $2 billion and $3 billion, according to people familiar with Archstone's finances.
http://online.wsj.com/article
http://online.wsj.com/article
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