Net Lease Investors Less Choosy About Long-term Tenants

MANASSAS, VA-A triple net IHOP here recently traded to an individual investor. The trade is not that unusual – IHOPs are a well-liked tenant – but the term of the lease, which is five years, is. Such deals may not be so rare going forward though. Betty Friant, vice president at Calkain Cos., brokered the transaction and she reports that as quality properties remain scarce, investors are more willing to consider shorter terms. As another example, she recently sold a Chevy’s in Annapolis, MD, with a lease term ending in 2019.

“More and more I am seeing investors willing to take a shorter term lease to get good tenant in well located property,” Friant says. The caveat is that the rent must be a market rent, she adds. No investor would want a tenant paying over market rent in a shorter-term lease as it would promptly leave when the lease is up.