Net Lease Investors Can't Get Enough High-Yielding REITs

Net Lease Press Releases

 High-Yielding REITs

Desperate for income, investors can't get enough high-yielding REITs and Wall Street is rushing to supply them. Companies are lining up to convert into REITs, a step that requires approval from the Internal Revenue Service.

Prisons, cell towers and golf courses were turned into REITs in the late 1990s, Mr. Westphal says with "pretty dreadful" results that in some cases produced losses of 90% or more.

So the market is changing and investors should temper their expectations accordingly.

While owning REITs is a good idea, panic buying isn't. Many investors are dumping money-market funds or bond funds and replacing them with higher-yielding REITs, says Morningstar analyst MichaelRawson. But REITs aren't bonds; the FTSE NAREIT Equity REITs Index, a benchmark of more than 120 of these stocks, lost 37.7% in 2008, when U.S. Treasury bonds had a positive 13.7% return.

http://online.wsj.com/home-page

UPREITS: TAX-DRIVEN CONVERSIONS FOR PROPERTY OWNERS

One of the more under-discussed aspects of the REIT is how it can benefit a seller of real estate. By contributing a property to a REIT you can achieve many of the same benefits associated with a §1031 exchange including deferral of gain recognition not to mention several other potential advantages. For the owner looking to monetize their investment in a tax advantaged manner with the possibility of additional upside this option deserves some additional examination. 

Click here for more Information about REIT 

www.calkain.com

Net Lease Press Releases: PA Dollar General Net Lease Sells for 7.35% Cap

Net Lease Press Releases: PA Dollar General Net Lease Sells for 7.35% Cap: Net Lease Press Releases Calkain Sells Jonestown, PA Dollar General Net Lease for 7.35% Cap Calkain Companies recently sold a...

PA Dollar General Sells for 7.35% Cap

Net Lease Press Releases

Calkain Sells Jonestown, PA Dollar General Net Lease for 7.35% Cap

Calkain Companies recently sold a Dollar General (NYSE: DG) net lease investment property located in Jonestown, PA. The transaction closed within the past 60 days and illustrated the compressing cap rates within the net lease segment of the market. The buyer was a privately, Pennsylvania-based net lease fund. The seller was a national real estate company, with a preferred development relationship with the tenant. The same seller has engaged Calkain to sell other stores throughout the mid-Atlantic states. The net lease Dollar General properties have been developed as part of Dollar General’s build-to-suit program. The stores have brand new 15 year triple net leases, which provide passive income for the new owner.

Calkain’s Andrew Fallon, Assistant Vice President, facilitated the transaction by providing exclusive representation to the seller. Investor demand for net lease Dollar General stores has significantly increased since S&P raised the company’s credit rating to investment grade BBB- in April 2012. The Jonestown store was highly sought after given its proximity and access to the I-78 corridor, the surrounding demographics, and the favorable lease structure. Fallon commented, “Cap rates for Dollar General have fallen below 7.50% and will likely trend to 7.25% based on a high demand and competitive bidding environment.” The combination of tenant credit and triple net lease terms provides a passive, bond-like fixed income investment, “The leases with Dollar General’s guaranty provide a strong income stream for the buyer, who will have limited to no management responsibilities.” The buyer financed the purchase using a regional bank.

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.

Ground Lease Rite Aid Sold

Net Lease Press Releases


Strong Buyer Demand Drives Sale of Rite Aid Ground Lease Sale in New Jersey

Calkain Companies’ Stan Wyrwicz and Mike O’Mara represented the seller in the sale of a Rite Aid Pharmacy ground lease in Vineland, NJ. The site houses a 14,600+/- SF building that are net leased to Rite Aid, which has been operating a pharmacy at that location since 2008. Wyrwicz commented, “We are seeing a strong demand from buyers looking for Rite Aid ground leases and pharmacies, which are a rare commodity. Cap rates on Rite Aid transactions have compressed quite a bit in the last year as a result of the continued progress in its financial turnaround.” The buyer was a private local investor. Jack A. Sattin of Market Development Group, LLC represented the buyer.

 

NOT SITE PHOTO

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.

Net Lease Dollar General in Va Sold

Net Lease Press Releases

Calkain Companies recently sold a Dollar General (NYSE: DG) net lease investment property located in Petersburg, VA. The transaction closed within the past 30 days and illustrated the compressing cap rates within the net lease segment of the market. The buyer was a privately held, fully integrated real estate investment company. The seller was a regional real estate developer. As a preferred developer for Dollar General, the same seller has engaged Calkain to sell another store in Halifax, VA. These Dollar General properties have been developed as part of Dollar General’s build-to-suit program. The stores have brand new 15-year triple net leases, which provide passive income for the new owner.

Calkain’s Andrew Fallon, Assistant Vice President, facilitated the transaction by providing exclusive representation to the seller. More sales of Dollar General Stores have been transacting since S&P raised the company’s credit rating to investment grade BBB- in April 2012. The Petersburg store was highly sought after given its proximity and access to the I-95 corridor, the surrounding demographics, and the favorable lease structure. Fallon commented, “As Dollar General continues to roll out new stores in new markets, the investor demand continues to increase for superior market locations.” The combination of tenant credit and triple net lease terms provide a passive, bond-like fixed income investment, “The leases with Dollar General’s guaranty provide a strong income stream for the buyer, who will have limited to no management responsibilities.” The buyer financed the purchase using a regional bank.

Calkain Companies is a boutique commercial real estatebrokerage 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, Northeast and a new office opening in the Midwest. Additional information about the firm and listings may be found at www.calkain.com.

Net Lease CAP Rates Cooling-Off

Net Lease Press Releases 

Cap rates on Walgreens and CVS properties remained flat with the quarter prior at 6.45 percent and 6.7 percent respectively, but cap rates on restaurants fell 25 basis points to 7.25 percent. Cap rates on McDonald’s restaurants in particular fell 20 basis points to 4.8 percent, and cap rates on Dollar General stores fell 15 basis points, to 8.1 percent. 

However, few of those properties are trading in the core markets. Finding a McDonald’s or a Walgreens for sale in a primary market has “gotten tougher because there is not a lot of new things coming out of the ground and partly that’s what pushed down cap rates, as well as [the fact that] interest rates have gotten so low,” says Jonathan W. Hipp, president and CEO ofCalkain Cos., a Reston, Va.-based brokerage and consulting firm specializing in the net lease sector.

www.calkain.com

Sale of Multi-Tenant NNN Investment in Spring Hill, FL

Net Lease Press Releases

Calkain Companies, a national net lease commercial real estate firm, recently brokered the sale of a multi-tenant, NNN investment in Spring Hill, Florida. The two-tenant investment property is situated on 1.08+/- acres with high visibility to busy US HWY 19, just 30 minutes North of Tampa. It is occupied by Pet Supermarket, based out of Sunrise, Florida. BBB- rated, Humana Marketplace, headquartered in Kentucky is also a tenant.

The site is a 9000+/-sf building divided into 7000+/-sf for Pet Supermarket and 2000+/-sf for Humana. Pet Supermarket renewed their lease for 7 years with structured increases and options and Humana exercised their 2 year option. The seller, an experienced private owner and long-time client of Calkain, was looking to liquidate to secure other opportunities. The property sold for $1.61MM which is a 8% cap rate to a private Florida based buyer completing a 1031 exchange.

Calkain Associate, Teal Henderson, who was recently tapped to open the new Midwest office in St. Louis, MO from Tampa, exclusively represented the private seller and provided marketing and transaction support services throughout the sales process. The property was initially introduced to the market with quickly expiring leases. Henderson commented, "We quickly recognized the hurdle of the current lease terms being unfavorable along with the tertiary and lesser known Florida location of Spring Hill. We counseled the seller in reaching out to the tenants and restructuring with more attractive terms. Then after successful negotiations, we re-introduced the property on the market and generated a quick contract. A private buyer interested in a Florida property with an investment grade tenant with ties to the medical industry purchased the asset." As a NNN ground lease, this investment requires that the tenant pay for real estate taxes, insurance, and maintenance expenses, which effectively provides the landlord with a passive, bond-like income stream through commercial real estate ownership. The transaction occurred within the last 15 days and will be recorded in the public records.

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, Northeast and a new office opening in the Midwest. Additional information about the firm and listings may be found at www.calkain.com.