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

Realty Income to Acquire up to $544 Million of Net Lease Propertiesn 11 Different industries

NNN Lease Market News

Realty Income to Acquire up to $544 Million of Net Lease Properties

The properties to be acquired are located in 17 different states and consist of approximately 3.8 million square feet of leasable space. The majority of the lease revenue from these single-tenant properties is generated from investment grade tenants, or their operating subsidiaries, in 11 different industries. The single-tenant distribution properties representing 34% of the lease revenue include; Aviall Services, Caterpillar, FedEx Corporation, and International Paper. The single-tenant retail properties representing 33% of the lease revenue include; AMC Theaters, Cinemark Theaters, Regal Cinemas, and Walgreens. The single-tenant office properties representing 25% of the lease revenue include; Fiserv, Inc., Novus International, Solae and T-Mobile USA. The single-tenant manufacturing properties representing 8% of the lease revenue include; Coca-Cola and MeadWestvaco Corporation. The average remaining lease term of the properties is over 11 years, which is consistent with the average remaining lease term of Realty Income’s existing portfolio of approximately 2,500 net leased properties.

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, net-leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
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. Net leased properties also are very attractive to investors who need to do 1031 tax-deferred exchanges, or 1031 exchanges for short.

http://www.calkain.com/

(NNN) Three Triple Net Lease Sold

NNN Lease Market News

Reston, VA — Calkain Companies', a national real estate investment brokerage firm, has procured the sale of three triple net (NNN) lease investment properties including a Wendy's in Bowie, MD, M&T Bank in Maple Lawn, MD and a CVS in Fairfax County, VA totaling almost $10 million.

Rick Fernandez, Assistant Vice President of Calkain Realty Advisors', the private market division of Calkain Companies, led the marketing and sales for each of the transactions. Fernandez commented, "The Wash DC metro area has national appeal and the combination of strong performance by the tenants and high profile locations made these unique opportunities for the investors." Fernandez generated multiple offers for each of the assets and ultimately completed the sale of each transaction in an obviously challenging market. Jonathan Hipp, President & CEO of Calkain Companies continued, "Rick proved that quality real estate is highly desirable, no matter what market cycle is occurring." In each scenario, appropriate debt was placed on each asset and leveraging the properties with a supportive loan was an essential consideration for each buyer. Fernandez said," The availability of favorable financing is testament to the strength and stability of the Wash DC metro market."

Commercial NNN Lease Terms

NNN Lease Terms

General Terms and Definitionsin describing the manner in which services and expenses are paid by the tenant to the landlord; different commercial leasing terminologies are used. Though there is no limitation to the commonly-used terms in a contract, there are some common terms that are found in the majority of commercial real estate contracts. These include:

Net lease - As the term indicates, this is a rent payment that applies exclusively to real estate. This means that other potential operating expenses such as estate taxes, insurance, utilities, etc. are not incorporated in the rental amount as opposed to A Triple Net Lease is also known as Net Net Net Lease or NNN Lease. This is a type of net lease in which the tenant pays all or part of the taxes, insurance, and maintenance associated with use of the property. These fees are paid in addition to the tenant's regular monthly rent.
Triple Net leases almost always favor the landlord and should be carefully negotiated to limit how much the landlord can increase NNN fees each year.

 Gross lease - This usually means that some of the operating expenses are included in the tenant’s payment, such as the real estate taxes. Optionally, building insurance and/or common area maintenance (CAM) could be included as well. Tenants should ask what this amount includes especially any of the escalation clauses included in the agreement.


Modified net lease - This is a term that is a compromise of the triple net lease and the gross lease terms. Usually, this is the term used when both parties enter into an agreement to split maintenance expenses, while the insurance and tax expenses would be shouldered by the tenant. This type of contract term is a common one for either side to easily consider because of its ability to be flexible and creative.

Full service lease - This term implies that the tenant’s payment incorporates all of the occupancy cost. This typically includes base rent, insurance, C.A.M., real estate taxes and even garbage disposal. In some instances, a full service lease may also include an additional charge for electricity.