Restaurants continue to be a highly desired asset among netlease investors. With QSR & Casual Dining restaurants leadingthe way, cap rates continue to decline - average QSR cap ratesdropped from 6.61% in 2013 to 6.38% in 2014 and Casual Dining from7.29% to 7.03%. Driven by a stronger economy and historically highlevels of pentup demand among consumers, restaurant-industry salesare expected to hit a record high in 2014. According to theNational Restaurant Association's Restaurant Industry Forecastreport, restaurant-and-foodservice sales are projected to total$683.4 billion in 2014, up 3.6 percent from 2013. Restaurantconsumer spending has already increased 1.7% in the first quarterof 2014 according to the NPD Group despite first quarter foottraffic declining by 1%. This increase in spending is attributed tothe industry wide average check increasing to $6.62 per person.

From a net lease investment perspective, restaurants andespecially well known chains such as McDonald's, have alwaysappealed to investors. Following from the mantra “everyone's got toeat” well located restaurant properties are some of the most soughtafter assets. While other retailers such as banks and big boxeshave to worry about the impact of online retail, restaurants arenaturally protected as they deal with perishable goods (much likegrocery stores). A strong restaurant location will always generatesales, so even if the space goes dark, it's easy to in-fill withanother tenant. Restaurant properties also feature some of the mostwell known brands - McDonald's, Burger King, IHOP, Applebee's etc.The name recognition these brands confer on the underlying asset isappealing to investors.

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