SAN FRANCISCO-“The sale-leaseback market continues to thrive. Current market dynamics are optimal, allowing companies to strengthen their balance sheet at the lowest sale-leaseback rates in the last five years.” So says San Francisco-based John Glass, a senior vice president of investments and senior director of the national retail group of Marcus & Millichap, who recently chatted with GlobeSt.com on the subject of net-leased properties.
Glass has—over the first six months of 2012—closed $84.4 million in single-tenant net-leased property sales, and points out that by repositioning their balance sheets through a sale-leaseback, “companies are also able to tap additional sources of both short- and long- term credit facilities at historically low rates.”
Single-tenant net-leased properties, even in secondary and some tertiary markets, with strong corporate guarantees and backing, he explains, are in high demand among investors seeking a safe haven from other volatile investments, such as the stock market. This demand has caused a compression of cap rates for core properties, according to two recent second quarter industry reports.
“The single-tenant segment of the market has outperformed virtually every other segment of the commercial real estate market over the past two years,” Glass explains, adding that investor preference for those types of assets is expected to remain strong as the year progresses. He notes that they “will hinge upon demand from cost-conscious consumers.”
While more Americans are returning to work each month, personal incomes are relatively stagnant, Glass explains. “As a result, the average consumer has become an avid bargain-hunter after the prolonged recession.”
Check back later this week for more net lease coverage.