Going Where the Tenants Are
This is an HTML version of an article that ran in the April 2014 issue of Real Estate Forum. To see the story in its original format, click here.
The numbers help tell the story. At the outset of the “Town Hall Meeting: State of the Industry” Panel during the 12th annual RealShare Net Lease Conference, moderator Craig Tomlinson produced a chart showing 11 consecutive quarters of year-over-year volume growth in the sector. While it’s clear that net lease is drawing a bigger crowd these days, it’s equally clear that the risks are growing as cap rates are shrinking.
To find the risk-adjusted returns they’re looking for, some of the net lease investors on this year’s Town Hall panel will follow credit tenants into out-of-the-way locations. The experts brought together for the occasion focused on this and other topics, including their financing strategies and the inevitable rise in interest rates.
CRAIG TOMLINSON: How has the first quarter been for each of you in terms of activity?
GINO SABATINI: We had a terrific first quarter. We did over $400 million on the net lease side, and that was up from prior years.
PAUL McDOWELL: We had a very active first quarter as well. We publicly announced that our target for the first quarter is $1 billion in new acquisitions. We’re seeing a very strong flow of transactions, and that flow feels like it’s getting better each month.
GORDON J. WHITING: Our first quarter this year was surprisingly strong. The fourth quarter is always our largest, but in the first quarter we either closed or got under contract a little over $300 million worth of transactions. So I think it bodes well for the year.
RICHARD H. ADER: I would say our first quarter was pretty flat from last year. We’re still seeing about $250 million in deals a week. We’re a little bit more selective than most as to what we’ll acquire. So our volume is not quite what all the gentlemen here do, but we still had a pretty good first quarter, somewhere around $100 million.
RICHARD ROUSE: We probably closed over $200 million of transactions in the first quarter. 2013 was a very good year for us, and this year looks to be better.