MIAMI—Who are the most active investors of FedEx buildings? Whatare the challenges impacting interest in FedEx buildings? What doesthe future hold for the investment in FedEx buildings?

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GlobeSt.com caught up with Britton Burdette, anassociate director at Stan Johnson Company, to get answers to thesequestions in part two of this exclusive interview. You can stillread part one: Why Investors Are Bidding Hard for FedExBuildings.

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GlobeSt.com: Who are the most active investors ofFedEx buildings? What are each of them interestedin?

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Burdette: The single tenant-focusedinstitutions have been the most active from a transaction countstandpoint, but they have not been the most aggressive investors inrelation to cap rates. The new Ground hub facilities with fresh15-year lease terms have been trading in the low 6 caps and havelargely been going to domestic and international private capitalgroups.

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These private exchange and foreign buyers are more flexible ontheir return requirements as their primary focus tends to be on thepreservation of wealth. Because of this, the marketing process ismuch more granular in how the property is exposed to the marketwhen pursuing offers. The single tenant intuitional buyers havebeen grabbing many of the FedEx leased deals with moreseasoned/renewed leases or offerings located in smaller marketswhere they can get a bit more yield.

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GlobeSt.com: What are the challenges impactinginterest in FedEx buildings?

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Burdette: Rent per square foot and price persquare foot are typically the largest challenges in selling a FedExfacility. As a result many institutional buyers have not been ableto get down to the lowest cap rates for the new Ground hubfacilities.

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Typically rents in new FedEx facilities are over market, due toFedEx's locational and facility requirements for the most part. TheFedEx offerings with 15-year leases have provided a good deal ofrelief to this challenge by giving buyers more time to returncapital in the primary term.

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GlobeSt.com: What does the future hold for theinvestment in FedEx buildings?

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Burdette: Demand for FedEx leased assets shouldremain healthy in the near term. FedEx has proven its network, andinvestors understand its value. FedEx plans to roll out a number ofnew Ground facilities and investors will pay a premium for thesenew assets. I would not be surprised to see one of the new hubfacilities break into the 5 caps at some point in the nearfuture.

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