2013 ended with a flurry of activity as people rushed to close deals by years end. Overall we saw cap rates slide upward in December from their sub-seven status in November. The second half of 2013 overall saw cap rates increase and we expect this trend to continue into and throughout 2014. As interest rates rise and construction increases, their impacts will become bolder and more pronounced cap rate increases will be observed.
We also expect the net lease market to continue it’s growth into the mainstream and out of it’s “niche” status in 2014. Already in 2013 American Reality Capital purchased CapLease for $2.2 billion and will merge with Cole Real Estate in a transaction worth $11.2 billion – creating the largest Net Lease REIT with an enterprise value of $21.5 billion and the largest REIT merger in two years. In-fact, publicly traded net lease companies now combine for $40 billion in market capitalization – a larger presence than the industrial real estate REIT sector and on par with lodging and self-storage.
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