Triple Net Lease Market News
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.”
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