Monthly Net Lease Trend Report - February 2014

Overall net lease retail cap rates continue to hover around the upper 6th and lower 7th percentile range. The overall net lease retail average for 2013 ended up at 7.05% and as we enter 2014 we expect averages to remain closely bound to this relative range (with periodic fluctuations). C-Stores and Pharmacies continue to have some of the lowest cap rate averages (6.34% and 6.41% respectively) while Dollar Stores and Automotive range higher (7.22% and 7.07% respectively). As 2014 wears on and interest rise, it is likely cap rates will begin to gradually increase. There is still a high level of disparity between grade-A assets in prime locations, with long leases and investments which may not be a credit tenant or in a tertiary area. Urban assets are especially prized with some recently trading at higher price per square foot values than have been seen before. Areas like Washington DC, New York, Houston etc continue to be heavily prized.