CPN - September 2008 - (Page 22) INDUSTRY PULSE NET LEASE intend to place any debt on their portfolio, a venture between National Retail Properties Inc. and Crow Holdings Realty Partners IV allows for leverage as high as a modest 55 percent.And the partnership forged by Duke Realty Corp. and CB Richard Ellis Realty Trust can go as high as 65 percent. In a more entity-based structure, private equity managers E2M Partners L.L.C. and Sammons Enterprises Inc. have jointly invested in major build-to-suit player Koll Development Co. Koll partner Bill Rafkin said the investment is not aimed at filling any leverage gaps; instead, it is intended to expand the company’s geographic footprint and has the potential to double its overall capitalization. “We now have the liquidity to act more quickly,” Rafkin added. In some cases, that might include acquiring property adjacent to a build-to-suit site for potential expansion or perhaps some speculative development. Currently, active lenders’ unwillingness to go beyond 65 percent or maybe 70 percent is the key factor sidelining so many players that would otherwise compete with the equity-heavy ventures for investment opportunities. Tenant-incommon syndications had been the most active buyers of modest-size net lease properties when Wall Street’s conduit lenders were frequently allowing for leverage as high as 80 percent, recalled veteran real estate securities analyst and fund manager Craig Silvers, president of Bricks & Mortar Capital. But NET RETURN In the past 90 days, more net lease product has been put on the market and sale-leaseback activity has increased. And while obtaining financing has been tough across the commercial real estate market, good net lease properties are still attracting buyers, according to Calkain Cos. president & CEO Jonathan Hipp. Calkain recently sponsored a survey of CPN readers that invest in net lease properties. Some surprising responses: ® A large percentage of investors are not looking overseas, which Hipp interpreted as a still-positive outlook on U.S. opportunities. ® A majority of respondents said Based on the current debt markets, what is the shortest lease term you will buy? Less than 5 years 5 - 10 years 10 - 15 years 15 years or greater 45% 10% 24% 21% What is more important to you now: the quality of the real estate or the credit of the tenant? The quality of the real estate is all important now. I look at both equally. Tenant credit or quality reigns supreme. 34% 56% 10% Source: CPN survey 22 COMMERCIAL PROPERTY NEWS • September 2008 • www.cpnonline.com http://www.usrealtyadvisors.com http://www.cpnonline.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.