Real Estate Forum Presents: Influencers in Net Lease
Net lease transaction volumes total $44.1 billion in 2018, with the industrial sector becoming the most active asset class. So says a recent report…
Net lease transaction volumes total $44.1 billion in 2018, with the industrial sector becoming the most active asset class. So says a recent report from JLL, which also said that investors are continuing to target both assets in secondary and tertiary markets with private investors remaining the most prominent buyer type in the sector.
Cap rates for net lease assets are also slated to mark some uptick after hovering around historic lows, the JLL report said. A report from the Boulder Group said that cap rates in the single tenant net lease retail sector, for example, remained unchanged (6.25%) in the fourth quarter of 2018 when compared to the prior quarter and that cap rates for the office and industrial sectors increased by 2 and 5 basis points respectively. “As the Federal Reserve continues to implement its monetary policy there is investor expectation that cap rates should trend upward in 2019.”
The Boulder Group report says that the majority of property owners believe we are in the last stages of the current real estate cycle. Accordingly, property owners are supplying the current market with their non-core net lease holdings in order to take advantage of the historically low cap rate environment.
“As alternative investments including the stock market have experienced recent volatility, net lease assets perceived as the safest and most secure are still commanding historically low cap rates,” the Boulder Group report says.
So, while investor demand for the net lease assets seems to remain strong and the market is expected to remain active in 2019, Real Estate Forum wanted to highlight some of the many professionals and organizations who have made an indelible impact on the business. Whether through contributions to the industry via extensive deals and projects, or through best practices and introduced innovations to the net lease space, they have all helped to shape their field and where it is headed. Turn the page to read about some of the most notable names in net lease real estate.
RICHARD H. ADER
Ader is known as a pioneer and leading authority in the field of corporate sale-leasebacks, delivering innovative and revolutionary net lease structures including the sandwich lease, stepped rents and accrual leases. He has overseen the acquisition and management of over $20 billion of net lease real estate.
Ader has also acquired and operated more than 20 million square feet of office, retail and industrial property, as well as 36,000 residential units and 5,000 hotel rooms, throughout the US during his career. Prior to forming U.S. Realty Advisors, he served as chairman and CEO of American Real Estate Partners, a NYSE-listed master limited partnership consisting of net lease real estate investments.
BRYAN BENDER
Bender is partner and managing director of Fortis Net Lease, the Farmington Hills, MI-based firm he founded in 2010 with his brother, Robert Bender, and business partner Doug Passon. With more than $1 billion in personal net investment career sales, Bender facilitated more than 130 transactions valued in excess of $197 million in 2018 alone.
RANDY BLANKSTEIN
In addition to advising clients on the acquisition and disposition of net lease properties across all subsectors, Blankstein is charged with guiding the overall operations of the Boulder Group. One of his significant tasks is mentoring the next generation of leaders both at the company and the broader industry. He also launched and manages the firm’s co-investment program, which has acquired $173 million in STNL assets.
G. JOSEPH COSENZA
Initially a teacher and assistant principal, Cosenza has also held prominent roles in the banking industry. These include serving as a director of Continental Bank, and chairman of American National Bank of DuPage, then as chairman and director of Inland Bank & Trust. He was also a board director of Inland Bancorp.
Cosenza was recently inducted into the Chicago Association of Realtors Hall of Fame. The Inland Real Estate Group of Cos. Inc. was also the first inductee into CAR’s Corporate Hall of Fame.
RALPH CRAM
A widely regarded expert on net lease financing and investment, Cram has spoken at virtually every major national and regional industry conference. He has also made presentations on US net lease investment to the Singapore and Shanghai CFA societies. In 2009, he was awarded membership into the Counselor of Real Estate Association for his work on advising investors in alternative real estate strategies. Cram, who earned his CFA designation in 1995, is an active member of the Chartered Financial Analyst Society of Chicago and the CFA Institute.
W. KYLE GORE
In addition to investing for its own account, CGA provides debt financing and equity investment services to institutional and high-net worth investors and developers. Affiliates of CGA Capital have acquired and have interests in some $1.3 billion of net-leased US real estate.
In connection with his activities at CGA, Gore served as a managing director with RBS Greenwich Capital and Legg Mason Wood Walker Inc. He is also on the board of directors for Family Tree Inc.
STAN JOHNSON
With $3 billion in transaction volume annually, Stan Johnson Co. is one of the nation’s leading CRE brokerage and advisory firms focusing exclusively on the net lease sector. The firm provides acquisition, disposition, capital markets and advisory services for US institutions, developers, investment funds and private investors.
JONATHAN W. HIPP
Since launching Calkain Cos. in 2005, Hipp has grown it into one of the nation’s leading net-lease companies, with more than $12 billion in transaction volume. Hipp also expanded the Herndon, VA-based firm’s services to include brokerage, advisory, asset management, research and capital markets (with the NetCMG division).
JAMES G. KOMAN
In 2018, Koman led the acquisition of eight single-tenant industrial, healthcare and office properties across six states, representing a weighted average credit rating of A-. These investments, worth $400 million, advanced ElmTree’s strategy of acquiring undervalued and operationally significant assets leased long term to, or guaranteed by, investment-grade and high-credit quality tenants.
That venture is examplary of the complex transactions, led primarily by Koman, that are commonplace for ElmTree. Since its inception, the company has acquired, developed or financed roughly 300 properties valued at approximately $6 billion.
GLEN D. KUNOFSKY
Based in New York City, Kunofsky is an executive managing director of investments for Marcus & Millichap. He closed in excess of $1.8 billion in sales on 400 properties in 2018 alone, double the amount of any other broker at his firm. Kunofsky, who has orchestrated transactions on some 5,000 properties valued at about $13 billion so far in his career, has been named Marcus & Millichap’s top investment professional for the past four years, as well as its top net-lease investment agent for more than a decade.
Kunofsky is also the founder of the NNN Pro Group, a net-lease-focused company which has expanded to more than 45 investment professionals. The exclusive buy-side team is currently working with more than $700 million of exchange capital.
CHAD KURZ
The national director of single-tenant net lease division has been involved in more transactions than any other agent at Matthews REIS and set multiple cap rate records across the country. He received the Matthews Circle of Excellence award in 2016, 2017 and 2018, and has completed more than 300 transactions, totaling more than $587 million in sales alone.
Prior to opening Matthews’ Dallas office, Kurz visited the Children’s Hospital Los Angeles several times throughout the year to hand-deliver toys and visit with children. He also dedicates time to Meals on Wheels.
SHELBY E. L. PRUETT
As chairman and CEO of Capri-EGM LLC, Pruett also sits on the firm’s management and investment committees. The Chicago-based company and its predecessor organizations have acquired, originated and managed more than $10 billion in CRE investments directly and through entity-level investments. Recently Capri was brought on as a capital partner in a development partnership with Starwood Capital Group on the $74.2-million global headquarters for Syneos, a $3.7-billion publicly traded organization.
Pruett is a founding member of the Harvard Alumni Real Estate Board as well as a past board member of the International Advisory Board of the Harvard Real Estate Academic Initiative.
CAMILLE RENSHAW
Previously head of sales for Ten-X, Renshaw also founded Stan Johnson Co.’s New York office, where she led its sales team as top producer for five years, and was director of Colliers’ US capital markets division and a top 40 worldwide producer. She is an executive-in-residence at the NYU Stern School of Business, an advisor to DreamIt’s UrbanTech Accelerator and is on the Rutgers Big Data advisory board. Renshaw is a strong proponent of diversity and advancing women’s roles in business.
CHRISTOPHER H. VOLK
Volk, who co-founded STORE Capital in 2011, is known for leading the largest-ever real estate limited partnership rollup transaction of its time in 1994. In 2005, he led the creation of the first real estate master trust debt issuance in the US designed to finance net-leased assets. He also developed V Formula, a revolutionary equation for analyzing business models and the benefits of asset investments to grow shareholder wealth.
For more than 16 years, he’s served in numerous capacities with Franchise Finance Corp. of America and its successor, GE Franchise Finance, as president and COO and a member of FFCA’s board of directors. In August 2003, he co-founded Spirit Finance Corp., taking the REIT public on the NYSE the following year. He led the company as its CEO, president and board member until 2010.
GORDON WHITING
Earlier in his career, Whiting served as an executive director with W. P. Carey. He was also the president and portfolio manager of Corporate Property Associates 14 Inc., one of W. P. Carey’s publicly held non-traded real estate investment trusts (with more than $1.3 billion in assets) that invest in net-leased commercial and industrial properties.
From 2002 to 2010, Whiting was a member of the five-person Federal Retirement Thrift Investment Board, a position to which he was nominated by President George W. Bush and confirmed by the US Senate. This board oversees more than $290 billion of 401(k) type retirement accounts for most federal employees and military personnel.
ARCTRUST
ARCTRUST is a private REIT that focuses on intrinsic investments through protected appreciation vehicles for real estate. The PAVR program combines the cash flow features of a corporate bond with the appreciation potential inherent in real estate and includes investments such as net-leased properties, preferred equity interests and participating loans secured by direct interests in real estate.
During the past 35 years, ARCTRUST and its affiliates have been responsible for more than 500 transactions with an aggregate value in excess of $3 billion. Its portfolio of over 165 net lease assets is worth more than $700 million. Spearheading the Clifton, NJ-based firm’s strategy is a seasoned executive team that includes chairman Robert J. Ambrosi; James Steuterman, president and CEO; vice chairman Gary Baumann; Michael Ambrosi, chief operating officer; Jason Kessler, chief investment officer; and Marc Perel, president of development.
ARCTRUST, which currently represents numerous tenants in expansion programs and has an active joint venture program with preferred developers. has received numerous industry awards for its work. Among them are the ICSC Adaptive Reuse Award, Ernst & Young Entrepreneur of the Year, Best Mixed-Use Development from the New Jersey Builders Association, Best Urban Residential Project from the City of Philadelphia and the Environmental Protection Agency’s National Phoenix Award for the redevelopment of contaminated sites. It also received the first brownfields grant and the first economic recovery grant from the State of New Jersey.
The company is a leader in many different forms of real estate investment programs including private REITs, Opportunity Zone Funds and Delaware Statutory Trusts, in addition to its MORE (Money, Opportunities, Resources, Experience) Development program, which supplies qualified real estate developers with resources beyond just capital.
CBRE’s Net Lease Property Group
Chris Bosworth and Will Pike co-lead a practice that has the largest market share in the net lease industry. Consistently ranked as the firm’s top net lease team, the two focus on advising institutions, private equity firms, REITs, developers and corporate users on all facets of the net leased business.
In the past three years alone, Bosworth and Pike have been responsible for the disposition of 720 properties with a value of more than $8.2 billion. The Atlanta-based vice chairmen and managing directors have collectively executed more than 2,600 transactions valued in excess of $16 billion throughout their careers.
Bosworth and Pike co-lead CBRE’s Net Lease Property Group, which consists of a national team of senior advisors specializing in single-tenant assets, national net-lease portfolios, corporate sale-leasebacks and zero-cash-flow transactions globally. Both are also founding members of the firm’s Corporate Capital Markets practice, which provides advisory and execution expertise for planned and existing assets on behalf of corporate users, developers and owners.
In addition to his work in the net lease space, Pike serves the global head of retail | occupier capital markets services for CBRE, and is a board member of its investment properties and Americas brokerage divisions. He has been the number one retail producer at CBRE the past three years and was the first retail-focused capital markets professional to receive the title of vice chairman.
HFF’s Net Lease | CTL Practice
Since its formal launch in 2010, HFF’s net lease group has become of the country’s top capital markets intermediaries for net-leased assets, having closed more than $42 billion in STNL investment advisory and debt & equity placement transactions. In the past three years alone, the group has closed on 560-plus STNL transactions worth in excess of $21 billion.
Led by Mark West, Dallas-based senior managing director and head of HFF’s net lease | CTL practice, the group leverages the broader platform offered by HFF and its a 30-year history as a capital markets intermediary and investment advisor. This includes not only its business lines—debt placement, investment advisory, equity placement, funds marketing, M&A and corporate advisory, loan sales and loan servicing—but also its staff of over 1,000 in 26 offices, including nearly 400 capital markets advisors. Another resource is HFF’s proprietary database, CapTrack, which tracks more than $100 billion of transactional volume the firm is continuously pricing in the market, as well as the investment objectives of domestic and global capital providers.
Consequently, HFF’s investment advisors offer a “one team” national platform focused on all types of commercial real estate properties and portfolios. The net lease Team is fully integrated within HFF’s broad capital markets platform, allowing for the optimal execution of sales.
The Mansour Group | Marcus & Millichap
Led by brothers Alvin and Kevin Mansour, the Mansour Group of Marcus & Millichap is one of the most active teams in the net lease industry. During the course of a relatively young 15-year career, Alvin Mansour has sold more than $5 billion in commercial real estate, with a specific focus on net-leased properties. Kevin joined Alvin more than 11 years ago and together, their vision for the industry has helped transform the retail and triple-net commercial brokerage landscape.
This transformation is evident in the quality of net-leased properties they bring to market and their ability to develop a market for net-leased properties in a specific locale. The team handles the listing and disposition of more than 250 properties at any given time. Last year alone, the Mansour Group completed 182 transactions with a collective volume of $485 million.
Alvin is an executive managing director, and Kevin is first vice president, investments, with Marcus & Millichap’s IPA division in San Diego, covering the western institutional retail markets. Alvin has consistently been among the firm’s top three agents nationally. He is also the owner of the historic Army-Navy YMCA building in San Diego, a 95-year-old landmark property that is being reinvented as a luxury asset, the Guild Hotel, within Marriott’s Tribute Portfolio brand.
N3 Real Estate
Founded in 2004, N3 Real Estate is a fully integrated investment and development firm focused on retail, restaurant and net lease real estate across the US. The Southlake, TX-based company owns and manages over $300 million worth of projects for its investors.
A leader in preferred development and build-to-suit services including
multi-unit rollouts, N3’s retailer experience and strong balance sheet have helped to earn the firm a reputation for creating deals where others have failed. It is able to identify desirable locations and deliver on time and on budget, getting operators open as quickly as possible.
Operating the principles of integrity, transparency and efficiency, N3 team members are known for providing honest assessments of potential developments, including upfront discussions about rent targets and project costs, before taking on a project. If it takes an assignment, N3 does so knowing it can be successful.
With CEO Brenna Wadleigh at the helm, N3’s senior-level ranks are comprised of Jan Davidson, VP, development and construction; Jeannie De Fazio, VP, real estate; Debbie Hanley, VP, underwriting and legal; Scott Otness, VP and controller; and VP John Sengson.
Actively involved with ICSC, N3 team members are Certificated Retail Property Executives, Certified Leasing Specialists and Certified Retail Real Estate Professionals, ICSC’s newest and highest certification. They also are involved the association’s Next Generation leadership and program committees.
N3 and its professionals are just as passionate about giving back to their
communities in various ways, including serving as city council members, on the National Guard and with numerous charitable organizations. Further, for every lease that N3 signs, it also provides a donation to the tenant’s charity of choice.
Sands Investment Group
Almost a decade ago, Chris Sands set out to create a different kind of brokerage firm: one that was built on honesty and integrity, and fostered deep collaboration. The result of that vision is Sands Investment Group, a Charleston, SC-based company that is considered to be one of the foremost authorities in the net lease space.
Since 2010, SIG has grown exponentially in terms of headcount, new office openings and production volume year-over-year while competing with larger and more tenured CRE companies. Over the past three years,
the firm has seen its volume increase by 123% and its closed transactions grow by 60%. Collectively, the SIG team has more than 400 closings on the books and has exclusively listed and sold $1.6 billion in transactions.
With a 90% growth in headcount since 2016, SIG is also one of the industry’s most sought-after places to work. The company’s above-average rating of 4.8 on Glassdoor, along with a 100% CEO approval rating, is also telling.
All the while, SIG has been able to maintain the values and culture that
were so important to CEO Chris Sands. He is joined on the leadership team by Liz Sands, chief operating officer, and a trio of managing directors within its regional offices: Atlanta-based C-store specialist Andrew Ackerman, Dan Hoogesteger, an expert in the grocery space who operates out of Santa Monica, CA; and Max Freedman, an Austin-based specialist in the quick-service restaurant segment.
The SIG team believes that with success comes great responsibility. Accordingly, the firm donates a percentage of its revenues to charity through its SIGives arm. Since its inception, SIG has provided more than $1 million to such charities and organizations as Meals on Wheels, St. Jude’s Children’s Hospital, Big Brothers Big Sisters, Special Olympics and Wounded Warriors.
SRS National Net Lease Group
Patrick Luther and Matthew Mousavi are among the most active retail investment advisors in the country, consistently breaking numerous records both within SRS Real Estate Partners and the industry at large. The duo ranked as the No. 1 producers nationally among SRSRE’s 23 offices in both 2017 and 2018, and they regularly rank among the firm’s top 10 brokers in terms of transaction volume.
The managing principals co-founded the SRS National Net Lease Group three years ago with four employees in one office. Today, the group has more than 50 staff and brokers across seven states in the country, serving as the exclusive net lease investment advisory and capital markets platform of SRSRE, one of the largest US commercial real estate firms focused solely on retail services. The NNLG currently has 60-plus properties under contract and in excess of $600 million worth of deals on market, representing more than 150 assets in 37 states,
Mousavi and Luther are also part of the leadership of SRS’ Investment Sales Property Group, also launched in 2016 as a new service offering for a company mainly focused on retail leasing. Over that period, the investment sales brokerage has grown from two individuals to more than 40 investment sales brokers and staff located throughout the country.
With more than 25 years of experience between them, Luther and Mousavi have collectively completed thousands of transactions worth more than $4.5 billion. In addition to working as active brokers, they set the tone and vision for NNLG’s and IPG’s short- and long-term growth, capitalizing on SRSRE’s national presence and its relationships with owners, developers, landlords and tenants across the retail real estate spectrum.
The two also manage to find time to mentor a new generation of associates, overseeing their personal and professional development. Luther, who has won the CCIM CoStar Power Broker award for multiple years, is an ICSC NextGen Board Member. Meanwhile, Mousavi recently became the youngest member to sit on the board of SRS Real Estate Partners. He is also the youngest member of the Real Estate Advisory Board at the Center for Real Estate | Paul Merage School of Business at the University of California, Irvine, his alma mater.
VEREIT Inc.
After going into a period of transformation four years ago, VEREIT has emerged as one of the largest and most diverse single-tenant REITs in the US, with plays in retail, restaurant, office and industrial real estate.
Since 2016, VEREIT has been involved in more than $9.3 billion of capital activity, including acquisitions and dispositions of more than $3.6 billion properties to strengthen its portfolio and balance sheet. In addition, its balance sheet has been enhanced by a new $2.9-billion unsecured credit facility, and the firm has accessed public equity and debt by issuing nearly $3 billion in stock and unsecured bonds.
Today, the REIT has a total asset book value of $14.1 billion and portfolio that is more diverse than ever before, with its top 10 tenants representing less than 29% of income. It has also achieved investment-grade corporate ratings from all major agencies for three consecutive years.
This success stems from the efforts of the Scottsdale-based firm’s leadership team, consisting some of the most seasoned executives in the business: Glenn Rufrano, chief executive officer; Michael Bartolotta, EVP and chief financial officer; Lauren Goldberg, EVP, general counsel and secretary; Tom Roberts, EVP & chief investment officer; and Paul McDowell, EVP and chief operating officer.
The company owns one of the single-tenant portfolios in the US,
accounting for 93.9 million square feet spanning some 4,000 properties. With an annualized rental income of $1.1 billion, the portfolio is over 98% occupied by more than 650 tenants—40% of which are investment grade-rated—across 42 industries.
W.P. Carey Inc.
When W. P. Carey was founded in 1973, it pioneered the pooling of net-leased assets into funds that allowed individual investors to put their capital to play in the net-lease arena. A decade later, it introduced the use of SLB proceeds as a critical component of the capital stack for LBOs by providing $32 million in funds for William E. Simon’s acquisition of Gibson Greetings.
Following its 1998 NYSE listing, W. P. Carey entered the European market,
paving the way for increasing net-lease investment activity on the Continent. The firm again made headlines in 2009, at the depths of the financial crisis, when it provided $225 million of SLB financing to the New York Times, allowing the publication to pay off shorter-term debt obligations as other sources of capital were not available.
Since its conversion to a REIT in 2012, the firm has continued to demonstrate the value of its diversified investment strategy. Last year, W. P. Carey merged with its non-traded REIT affiliate CPA:17, placing it in the top 25 ranking on the MSCI REIT Index.
As of Sept. 30, 2018, W. P. Carey has built a portfolio pro forma of 1,186 net-leased properties covering approximately 133 million square feet, primarily in the US and Europe. Steered by Gino Sabatini, managing director and head of investments, key members of the W. P. Carey team include executive directors Andrés Dallal and Zachary Pasanen, directors Joseph Mastrocola and Tyler Swann, and analyst Andrew Huizenga.
The firm’s guiding principles by two core principles: investing for the long run and doing good while doing well. The W. P. Carey investment team looks for opportunities that not only meet investment criteria, but also provide capital to companies to support the overall economy and create job opportunities for those companies’ employees. As part of its larger corporate responsibility, the team strives to address the environmental and sustainability needs of tenants and the communities in which it operates. And, its Carey Forward program encourages all employees to become involved in philanthropic and charitable activities.