RESTON, VA—With large-scale sale-leasebacks making the headline news, net lease has been a favorite of institutional investors—both inside and outside commercial real estate—thus far in 2014, Calkain Cos. and Chandan Economics say in a new report. During the recession, the report notes, institutional CRE players saw triple net lease retail as a flight to quality, while non-CRE institutions viewed it as a higher-yielding alternative to corporate bonds. This level of interest is likely to continue for both groups, “now that triple net retail is emerging from its perception as an ‘other’ or ‘alternative’ asset class.

The poster child for both sale-leasebacks and the overall health of the triple net sector is American Realty Capital Properties. The report cites ARCP’s recent merger with Cole Real Estate Investments to form a $21-billion net lease REIT, the largest of its kind in the US, as well as its $1.5-billion SLB with Golden Gate Capital on approximately 500 Red Lobster locations, following GGC’s acquisition of the seafood chain from Darden Restaurants.

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