LOS ANGELES—Starpoint Properties is re-focusing its development and investment strategy on triple-net retail properties. Despite the narrative that brick-and-mortar is having tough competition from ecommerce, Starpoint is finding a wealth of restaurant and drug store opportunities. We sat down with Evan Farahnik, a principal at the firm, to find out more about the strategy and why they are focusing on this retail niche now.
GlobeSt.com: Why is your firm specifically looking for NNN retail investments in this market?
Evan Farahnik: Starpoint Properties is looking for NNN development opportunities or NNN portfolio acquisitions in either Drug Store or Restaurant concepts. There continues to be strong demand in the market for NNN products and we are creating opportunities in developing properties with strong Tenants for those buyers.
GlobeSt.com: NNN investments have always been a popular investment class. How has your strategy for NNN retail changed?
Farahnik: With the opportunity for buying value-add product diminishing as we come out of the last downturn, we made a conscious decision to focus more on our Tenant relationships and expand our offering to include ground-up NNN development. We're also recognizing an opportunity for portfolio sale-leasebacks in restaurant concepts and franchisees that need to raise capital for growth.
GlobeSt.com: What are the cap rates for these properties, and what is your typical investment profile for a NNN asset?
Farahnik: We're not buying NNN assets at low cap rates to hold, we're either developing and exiting at a market cap rate, typically in the mid to high 4 cap exits on drug stores chains and we look for a 75 to 100 pbs spread in cap rate arbitrage for restaurant concepts with sale leasebacks.
GlobeSt.com: How are you winning deals with so much competition from other investors?
Farahnik: We rarely go after highly marketed deals. We try to leverage our Broker and Tenant relationships to access deals and create the right business plan for successful execution.
GlobeSt.com: Do you have concern about the ecommerce effect on NNN retail?
Farahnik: We've purposely selected NNN segments that we forecast will have a lesser degree of competition from ecommerce.
LOS ANGELES—Starpoint Properties is re-focusing its development and investment strategy on triple-net retail properties. Despite the narrative that brick-and-mortar is having tough competition from ecommerce, Starpoint is finding a wealth of restaurant and drug store opportunities. We sat down with Evan Farahnik, a principal at the firm, to find out more about the strategy and why they are focusing on this retail niche now.
GlobeSt.com: Why is your firm specifically looking for NNN retail investments in this market?
Evan Farahnik: Starpoint Properties is looking for NNN development opportunities or NNN portfolio acquisitions in either Drug Store or Restaurant concepts. There continues to be strong demand in the market for NNN products and we are creating opportunities in developing properties with strong Tenants for those buyers.
GlobeSt.com: NNN investments have always been a popular investment class. How has your strategy for NNN retail changed?
Farahnik: With the opportunity for buying value-add product diminishing as we come out of the last downturn, we made a conscious decision to focus more on our Tenant relationships and expand our offering to include ground-up NNN development. We're also recognizing an opportunity for portfolio sale-leasebacks in restaurant concepts and franchisees that need to raise capital for growth.
GlobeSt.com: What are the cap rates for these properties, and what is your typical investment profile for a NNN asset?
Farahnik: We're not buying NNN assets at low cap rates to hold, we're either developing and exiting at a market cap rate, typically in the mid to high 4 cap exits on drug stores chains and we look for a 75 to 100 pbs spread in cap rate arbitrage for restaurant concepts with sale leasebacks.
GlobeSt.com: How are you winning deals with so much competition from other investors?
Farahnik: We rarely go after highly marketed deals. We try to leverage our Broker and Tenant relationships to access deals and create the right business plan for successful execution.
GlobeSt.com: Do you have concern about the ecommerce effect on NNN retail?
Farahnik: We've purposely selected NNN segments that we forecast will have a lesser degree of competition from ecommerce.
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