Net Lease Retail, Growing Financing Options
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CHICAGO—There continues to be a rapid flow of capital into the net lease retail space. So says Stan Johnson’s Brandon Duff when chatting with GlobeSt.com in preparation for the upcoming ICSC RECon conference in Las Vegas. The locally based regional director tells GlobeSt.com that nontraditional real estate investors are looking in this space, and many financing options are available.
GlobeSt.com: What makes net lease retail properties attractive to investors in today's market?
Brandon Duff: Net lease properties are attractive to investors for a variety of reasons. Yes, in today’s supply constrained marketplace we are seeing continued downward pressure on cap rates. Yet, the yields for net lease properties are still attractive when compared to alternative investments and they come with the tax advantages. Retail properties specifically tend to have many financing options available and often come with little (if any) landlord management responsibility.
GlobeSt.com: How has the net lease retail market changed over the past few years?
Duff: For us, we have seen several changes take place the last few years. There continues to be a rapid flow of capital into the space. Especially from what we call “nontraditional real estate investors.” There has been a lot of money sitting on the sidelines starving for yield now looking for a home. Some other changes include a growing number of financing options and numerous new tenant expansions starting to take place.
GlobeSt.com: Who hold the upper hand with net lease retail properties—buyers or sellers? Why?
Duff: It is hard to not be a seller in today’s marketplace. We are seeing cap rates at historical lows, buyers fighting over acquisitions, and high probability of buyer execution. If your plan is to sell any time in the next few years I can’t think of a better time than now to be a seller.
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