NNN Lease Property Sells in DC Market

NNN Lease Market News

NNN Lease  Property Sells for over $4MM in DC Market

Although triple net leased acquisitions are hard to find in in the greater Washington DC market, Betty Friant, Vice President at Calkain Companies, recently brokered the sale of a NNN leased day care facility in Gainesville, VA for just over $4 million at a very attractive 8.64% cap.

The tenant signed a new absolute triple net lease on the 10,530+/- square foot state-of-the-art facility located near the entrance of the private Lake Manassas Development with its signature Robert Trent Jones Golf Club. Betty Friant exclusively represented the developer/landlord in the transaction. The property was introduced to the market with corporate and personal guarantees and a 15 year lease term with annual escalations beginning in year three.

“Day Care facilities provide a very attractive investment,” said Friant. “With McDonald’s and other credit tenants on the market in the 4% to 5% cap rate range, the 8.5+% cap on a day care gives investors another option. The fundamentals of the underlying real estate are important in the acquisition of a day care as they are with any real estate purchase, so a great location and market rents are crucial,” she added. Calkain currently has other day care facilities on the market for sale in the 7.5% to 8.5% cap rate range.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net leased transactions. While licensed to conduct business in many states, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast, Northeast and Midwest. Additional information about the firm and listings may be found at www.calkain.com.

NNN Lease Foreign Investors Pick Safe Havens of U.S Market

NNN Lease Market News 

NNN Lease Foreign Investors Pick Safe Havens of U.S Market

Calkain Companies, a national real estate investment brokerage firm, recently facilitated the sale of a net leased hospice located in Winter Haven, FL. This transaction marks the first closing in Calkain's international partnership with Platinum Investment Corporation, headquartered in Shanghai, China. This partnership was formed in the fall of 2012 and is committed to opening the global net leased investments to the Asian investor looking to the United States for passive cash flow and property ownership. The property, an 8,000+/- SF medical site, is well located on a signalized corner and had a 10 year lease with annual increases. The buyer assumed attractive financing terms offered by the seller's bank. Calkain's Asset Management Division was retained to manage the property for the foreign investor.

Associate Teal Henderson represented both the seller and the buyer in this transaction. "This closing is the beginning of a historical relationship and new venture for Calkain. We are looking forward to a very successful and long term partnership with Platinum Investment Corporation. As we educate investors in this demographic and their appetite grows, they are quickly becoming purveyors of the net lease product. We have been able to swiftly work through language and culture barriers, in addition to, a large time zone difference to close the first deal and we have already begun working on new transactions." Henderson commented.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net leased transactions. While licensed to conduct business in many states, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast, Northeast and Midwest. Additional information about the firm and listings may be found at www.calkain.com.

NNN Lease Market Podcast

NNN Lease Market News


 NNN Lease Market Podcast 


You'll be happy to know iTunes has posted our new podcast under New & Noteworthy for Business > Investing, as seen in the attached screen cap. This episode features Jonathan Hipp and Sam Chandon reviewing 2012 and looking forward to 2013. 

Here is the iTunes link where you can listen:

https://itunes.apple.com/us/podcast/calkain-net-lease-podcast/id631770417

I encourage everyone to take advantage of this new media outreach model and participate in future episodes. If there is a topic you'd like to promote - could be anything including tenants, locations, market trends, advice etc - just let me know and I'll get you on the air.  

Thanks!

Demand Heating up for Small and Mid-Size NNN Market

NNN Lease Market News

Low- and mid-range market sees growing activity as investors buy up store spaces; Eastern Consolidated starts new retail division

As the demand for these assets has increased in recent years, megadeals like Vornado’s $707 million retail condo purchase at 666 Fifth Avenue have grabbed headlines.

But the trend is now trickling down to the lower end of the market, brokers said, with demand heating up for small and mid-size retail condos in up-and-coming markets like southern Soho, especially along Canal Street, and the area adjacent to Times Square. An increase in 1031 exchanges — where owners buy property with money from the sale of property they already own, thus deferring the capital gains tax — has also contributed to the rising interest in retail condos, as investors have looked for cash flow in the difficult commercial real estate market, brokers said.

“It’s a very competitive market with lots of prospective buyers,” said Robin Abrams, executive vice president at Lansco, who noted that approximately half her brokers have done retail condo deals.

http://therealdeal.com/issues_articles/retail-condos-not-just-for-the-big-guys/

NNN CVS Pharmacy Trades for $14.5 million

NNN Lease Market News

Calkain NNN Investment Advisors recently completed the sale of a NNN investment property in Washington, DC. The purchaser, a private 1031 investor, seeking a stable, credit rated, income-producing asset. The sale, closing at over $1,154 per square foot, broke the record previously set by Calkain for a NNN investment sale.

Rick Fernandez, Managing Director of Calkain Urban retail  Investment Advisors, represented the seller in the transaction and Calkain Managing Director, Jerry Burg, represented the buyer on the purchase of the CVS on Columbia Road in Adams Morgan. “The Adams Morgan CVS is well situated in a grocery anchored, dense, high traffic, urban location within a diverse residential and retail community,” explained Fernandez. “The investor understood that this CVS not only provided a stable income stream backed by a strong credit rated corporate tenant, but also a highly adaptable asset with rock solid generational value,” continued Burg.

The seller reviewed multiple offers from across the country before closing with a private investor who was working with Burg to identify $35MM in NNN investment properties for a 1031 exchange. The transactions closed in the past thirty days.

Calkain Companies is a boutique commercial real estate brokerage firm which specializes in assisting buyers and sellers with single and multi-tenant retail, industrial, hotel and office net leased transactions. While licensed to conduct business in many states, nationally, Calkain has multiple office locations throughout the Mid-Atlantic, Southeast and Northeast United States. Additional information about the firm and listings may be found at www.calkain.com.

NNN Lease Market One of the Hottest Deals

NNN Lease Market News

The market for urban retail properties has witnessed a sharp resurgence in the past couple months. In-fact, we are seeing cap rates and prices that are reminiscent of the markets heyday back in 2005-2007. There is such a strong demand for these properties that they are routinely receiving multiple offers. This trend is being fueled by a number of factors such as inherently strong real estate quality, low interest rates, and a surplus of investors willing to deploy capital.

It is no secret that a great deal of the net lease market’s recent success is due to the security it offers investors. Net lease properties offer investors reliable income streams with little to no active management. These qualities are only enhanced in the context of urban condos. Unlike properties located in tertiary markets, urban retail can depend on higher foot traffic and a greater intrinsic value. This serves to add an extra layer of security to the investment – should a tenant leave it will not be hard to replace them.

Investors know this and are actively seeking these properties. Low interest rates coupled with a surplus of capital (that had previously been sitting on the sidelines) have led to a perfect storm of rising prices and falling cap rates. Likewise, many sellers are reluctant to sell because they would face the same problem in redeploying their capital. As demand continues to gain momentum it is likely investors will dig even deeper for tenant and location, resulting in downward pressure on cap rates.

http://www.globest.com/blogs

NNN Cap Rates Market Report

NNN Lease Market News

NNN cap rates declined by five basis points to just over 7.2% in the first quarter on average

The report covers trends in the macro economy with an eye on how these impact the net lease space.

It has found that the fit-and-start nature of the recovery has reinforced the appeal of net lease assets especially those with long term, high quality tenants. In addition, the sector is grappling by a lack of supply. The result of these multiple trends, not surprisingly, is that cap rates are low and getting lower. Namely, net lease cap rates declined by five basis points to just over 7.2% in the first quarter on average.

These rates, of course, fluctuate based on geography and tenant type. California and the Northeast, for example, claim the lowest cap rates.

The report also notes there is stronger investor demand for bank branches, pharmacies, and the best-performing fast food chains. Bank branches registered average cap rates of 6.1% in Q1, for example--100 basis points lower than the 7.1% average cap rate for pharmacies.

Investors, however, can be counted on to show a high degree of sophistication in their acquisitions not only across classes of tenants but specific tenants, as well. Sam Chandan, president and chief economist of Chandan Economics, tells GlobeSt.com. “Some pharmacy and bank branches are trading at sharply lower cap rates than their peers, even after controlling for variation in property quality and time to lease maturity.” For these most coveted assets, he says, debt yields are lower, as well, meaning that lenders perceive many of the same differences as relates to credit risk.

The most aggressive cap rates Jonathan Hipp, CEO ofCalkain, says he has seen has been in the mid 4s for “McDonald’s-type credit.”  Expect compression to continue, he tells GlobeSt.com. “Given where Treasuries are headed, people are looking for yield. Also, there is so much buyer interest in this product now we have gotten to the point where we almost don’t need new buyers. What we would like to have is more products.”

Not that the demand-supply imbalance will give investors pause, Hipp adds. “With everything going on, from the uncertain employment picture to the European debt crisis, at end of day people are still cautious on the economy. With the right combination of credit, location and length of lease it is a great time to be a seller in the net lease market.”

Or even a buyer, he says—but with a caveat. In this environment, current buyers should beware that an eventual exit strategy could happen in a period of higher interest rates and a diminishing flight to quality.

Source: GlobeSt.com

Nontraded NNN Lease Investments REIT Will do a Better Job

NNN Lease Market News

Industry executives say these new nontraded REITswill do a better job of giving investors a way to invest in real estate without the volatility of exchange-traded REITs, which have assets of roughly $500 billion. Like existing nontraded REITs, the new ones are offering attractive initial dividends, such as American Realty Capital's nearly 7% distribution and Cole Real Estate's 5.5% distribution.

But these new structures haven't completely silenced critics, who point out that some fees remain high and investors might still face redemption problems.

Jim Sullivan, a managing director at REIT research firm Green Street Advisors, says investors are still better off investing in a publicly traded REIT. "They are more liquid, they are more transparent and the market tells you every day what they're worth," he says.

Traded REITs, like nontraded ones, are required to pay at least 90% of their taxable income in the form of dividends. But unlike nontraded REITs, traded REITs' values are set throughout the trading day, giving investors instant transparency.

Nontraded REITs first became popular a decade ago. The pitch: Long-term investors would hold them for seven to 10 years, during which time they would collect attractive dividends. Then the REITs would sell their properties or go public, returning to investors their principal plus any gains. The trade-off was that redemptions would be limited during the lives of the REITs.

But fees were high—as much as 11% in initial sales charges. And only 19 of about 90 have returned investors' principal over the years. http://online.wsj.com

“A dividend that high indicates the market doesn’t believe that dividend is sustainable.

Yields in the 20s and 30s (and higher) often reflect a view by the market that this

dividend is likely to be cut. When investors get jittery about a REIT’s ability to cover

its dividend, they tend to sell shares, which causes the yields to jump. Some REITs

have suspended their dividends, while others have either trimmed them or opted to

pay a portion of them in stock.”  BradThomas.

NNN Lease Economic Report

NNN Lease Market News

How does employment growth impact net lease activity? Or is that question even relevant to the space at all? If you were to substitute “office” for “net lease” in that sentence, the answers would be clear and immediate: “significantly” and “definitely yes”, for starters. Then would follow any number of calculations designed to show the relationship between this particular macroeconomic metric employment and office leasing activity.

There is no comparable body of research for the net lease space, however. Now two companies locally based Calkain Cos., and New York based Chandan Economics are partnering to produce research in the net lease space. The companies, headed by Jonathan Hipp and Sam Chandan, respectively, plan to launch a quarterly publication starting in the next 30 to 60 days. Initially, the publication, called Net Lease Economic Report, will be available for free to its clients. The goal will be to analyze the impact and relationship between tenant, developer and investor demand for net lease assets as well as establish relationships with broader economic trends.

“This subset of commercial real estate has been growing for the past two years and attracting new investor interest,” Chandan tells GlobeSt.com. “There is a need for much more rigor behind the research and understanding of the investment.”

The last two years have indeed attracted new levels and types of investors, Hipp tells GlobeSt.com, primarily a combination of institutional and private market investor. “The net lease investment profile can be very appealing especially when there is a lack of predictability and enhanced risk around commercial real estate in general.” Net lease’s stability is one reason why it has been attracting growing levels of investment, Hipp adds.

“That flight to safety that happened after 2008 and 2009 and has continued to make the net lease an asset class highly sought after and highly attractive to investors.”

About Calkain: Calkain Companies where triple netlease properties are the focus of our business. Working through the net lease investment process with our clients is the basis and foundation of our firm. We are America’s Net Lease Company!

www.calkain.com

Distressed NNN Lease Market Continues Retreat

NNN Lease Market 

DC Commercial Real Estate has The Fourth-Lowest Level Overall of Distressed Assets 

While the volume of distressed commercial real estate properties is significant, so is the looming volume of stressed property. These properties have characteristics of concern in the short term — maturing loans, bankrupt tenants, under-performance, financially troubled owners or other significant obstacles that could potentially lead to distress in the future.

Washington and Baltimore

Of the 10 markets we track, the Washington area has the fourth-lowest level overall of distressed assets (excluding stressed) at $1.6 billion, while Baltimore has the lowest, at $430 million. Stressed assets are much higher in Washington, at $3.7 billion, third-highest among the 10 surveyed cities. Distressed real estate per capita is $289 per person for the Washington area, which is fourth-lowest among the 10 markets, while Baltimore has $157 per capita, which is the second-lowest of the 10 cities surveyed.

Opportunities to snap up distressed assets in the region have been limited. Washington’s assets have largely been held by strong, institutional ownership, and have benefited from the region’s steady economic performance and employment growth.

Mike Donnelly is a senior associate at Delta Associates. Staff at Delta Associates contributed to this article. For more information, please visit www.deltaassociates.com.

Sale of a NNN Lease Investment Property in Lorton, VA.

NNN Lease Market News

Reston, VA – Calkain Companies, a national real estate investment brokerage firm, has procured the sale of a triple net (NNN) lease investment property in Lorton, VA.
This "NNN" triple net leased property is a 3,695-square-foot office condominium. This "NNN" triple net leased property is located within the Lorton Station Town Center. The Tenant under the triple net lease is Defense contractor EOIR Technologies Inc. The purchaser of this triple net lease property a private investor. The NNN Lease Investment sold for $1.15 million, or about $311 per square foot.
This triple net lease property is newly constructed. The office condo offers office space with the NNN lease current. The primary NNN lease term was 7 years expiring in July 2016. The NNN lease has 3% annual rent bumps and provides for one 5-year extension option.

http://www.calkain.com/