NEW YORK CITY—In preparation for the ICSC New York conference, GlobeSt.com's Natalie Dolce caught up with Jason Maier, a director at Stan Johnson Co., to talk advice for owners and investors of net lease retail properties, among other things. According to Maier, investors should use the event to review their investment objectives, finalize deals and lay the groundwork for future deals.

GlobeSt.com: What are your goals and expectations for the ICSC New York National Deal Making conference?

Jason Maier: We expect this year's conference to be nothing short of spectacular. The ICSC New York National Deal Making conference's relocation to the Jacob K. Javits Convention Center is proof of its growth. With demand for product at an all-time high, I believe this will be the most active show we have seen yet. As sellers have become increasingly aggressive on pricing, we add value to our clients by bridging the gap between expectations and market activity.

The SJC New York team entered 2014 with, what we believed to be, high hopes. Having exceeded our annual goals in the early part of Q3, we have set our sights even higher for 2015. Our goal for this show is to meet with as many private equity funds, owners, institutions and developers to get an idea for what inventory will look like in Q1 and Q2 of 2015.

GlobeSt.com: What advice do you have for owners and investors of net lease retail properties as we head into 2015?

Maier: Breathe, wear comfortable shoes and get a good night's sleep. You're going to need it this year!

Investors should review their investment objectives and focus on using this event to get things done. I see too many owners and investors running around speaking to people they already know. The show is a time to finalize deals you have been working on and meet new people. If your goals are to lease up a store you own, get a pad site done or find a deal that fits with a 1031 exchange then use this time to identify who can help you accomplish those goals. Since schedules tend to fill up quickly for these events, I recommend you start setting up appointments today.

GlobeSt.com: What about the net lease market keeps you up at night?

Maier: The short answer: Any sudden sharp moves in the treasury market. I think we all have the same questions as we head into 2015. When will the market shift? What is that shift going to look like? I know as a company and team we spend countless hours looking at the primary economic indicators that directly affect our industry in an effort to predict potential shifts. We try to understand the bigger picture and how different events will affect the market. We all know that when interest rates rise some assets will experience a significant loss of value that may not recover until the next market cycle. Since debt plays such a crucial role in the compressed cap rate environment we are experiencing today, we all need to stay on our toes and remain focused on the treasury markets. My team maintains close contact with some of the largest fixed income hedge funds in the nation in an effort to help our clients stay ahead of the curve.

GlobeSt.com: What is the opinion of institutional investors with regards to net lease retail properties today?

Maier: With cap rates compressed and a constant pressure to get the capital out the door, the institutions have the toughest job in this market. They have to work harder and become more creative to compete with the overwhelming levels of private equity and foreign capital. Mark to market on net present value is another source of concern. You simply cannot use current cap rates for your exit when doing a seven year IRR calculations. The institutions know better than anyone when it comes to which assets will hold up and in what markets they can continue to be bullish. Due to the dividend yield requirements they have in their funds, competition is fierce.

Six of the 10 portfolios we transacted in 2014 would normally have been taken down by the larger REITS. However, private equity buyers not restricted by any minimum dividend requirement were able to win the bid by a spread of 50-75 basis points. In the larger price ranges ($25MM-$100MM) an institution's certainty of execution reigned supreme. Now with the massive amount of capital in the market, that card doesn't hold the weight it once did. The smart ones realize that asset pricing is far overvalued and are not willing to play the game.

That being said, the institutions are still some our most active buyers and sellers. However, we have seen an uptick in private equity transactions and expect more of the same in 2015. For the foreseeable future, private equity will likely continue winning. But as a firm built around our 20 year relationships with the larger institutions, I know we will continue to work hard in keeping their deal pipelines full.

GlobeSt.com: What are your expectations for 2015 net lease market?

Maier: Global returns on investment in Europe, South America and Asia are in the low 2% range. The regulatory environment, higher returns and the availability of debt/equity capital in the US markets are attractive to foreign investors. It's no wonder why foreign investment capital being deployed in the states continues to grow. When a market such as this one sustains itself for as long as it has, cap rates are bound to compress. I am a pessimist who tries to stay optimistic. In that spirit, I believe we will see a compression of cap rates into 2015 by another 10-25 basis points. Investors will have to accept ever shrinking cash-on-cash returns as the new norm. Net lease has become a global asset class and that is reflected in expected returns..

One of the greatest values SJC brings to the table, aside from being an industry leader, is the opportunity to view the market from so many different vantage points. During our normal course of business we deal with everything from the one-off 1031 buyer looking for a small fast food chain deal to the large corporate headquarters sale-lease back. The perspective gained from speaking to as many different investors as we do is invaluable. When underwriting an asset, we understand the profile of potential buyers, how they assign value, and we price the deal accordingly. The first quarter of 2015 will see more blockbuster trades and record prices, and may continue through Q2 and beyond. Until we see a real shift from the lenders I believe this market will stay the course.