Investment Grade Companies Predicted to Sell More Real Estate

Glen D. Kunofsky, executive managing director investments, Marcus & Millichap/Image credit: © Matt Greenslade

NEW YORK CITY—In the last few years corporate debt has been very cheap. “With investment grade credit rating, you could call up Goldman and Barclay’s and raise very cheap corporate debt and bonds with limitless amounts of debt out there,” says Glen. D Kunofsky, executive managing director investments, Marcus & Millichap, and founder and chairman of NNN Pro Group. “Now, with the tax change, companies can only write off a certain amount of corporate debt.”

In 2018 some of the larger investment grade-rated companies are going to be more open to selling their real estate because rent is still 100% deductible. It doesn’t affect their leverage ratios on EBITA. Also with the tax bill, with the corporate tax rate going down, a company can sell property and only pay a 20% pass-through rate, explains Kunofsky.