CPN - September 2008 - (Page 24) INDUSTRY PULSE NET LEASE investment volume is off “dramatically” so far this year, and he feels “no compulsion” to pull the trigger. Partnerships that are able to bypass the shaky debt market provide their own solutions.“Net lease deals still need to get financed, and these ventures create a means for filling that capital void,” Silvers said. “So it’s a pretty good time for these ventures to buy up properties,while there’s not so much competition” and values have fallen accordingly. The partnerships also represent attractive opportunities for operating partners to grow and diversify their portfolios while earning management fees that boost returns on their internal equity, he observed. Development represents another opportunity made possible by joint ventures that include financial partners.When construction and permanent lenders were competing heavily for deals in recent years, build-tosuit developers could often count on loan proceeds to eliminate any need for outside equity, Sides recalled. Now that less leverage is available and rising cap rates are eroding values of completed projects, many developers are taking on partners. The Stan Johnson team that Sides heads is actively arranging joint ventures between developers and equity sources for build-to-suits and other net lease investments. That comes as no surprise to Blankstein. “Considering what it takes to compete effectively in this environment, I’d expect to see more of these joint ventures being formed until the financing market comes back.” And that may not happen quickly. Ader,for one,would not be surprised if net lease investment volume remains slower than in recent years, he said.“This may not be a short-term situation. I’m not sure the conduits will be back anytime soon.” u Teaming Up Some noteworthy alliances between net lease players and equity sources: Team: Boulder Net Lease Funds L.L.C. & ORIX Real Estate Capital Focus: $150 million fund for unleveraged acquisitions of office and industrial; half invested Team: E2M Partners L.L.C. & Sammons Enterprises Inc. invested in Koll Development Co. Focus: office and industrial; more than 2 million square feet under development Team: Duke Realty Corp. CB Richard Ellis Realty Trust and Focus: $800 million worth of buildto-suit office and industrial Team: American Realty Capital Trust Inc. and Sandler O’Neill + Partners L.P. Focus: $250 million to $300 million in sale-leasebacks with middle-market banks during the first year Team: Lexington Realty Trust and Inland American Real Estate Trust Inc. Focus: $1.1 billion diversified portfolio; approaching $750 million Team: National Retail Properties Inc. and Crow Holdings Realty Partners IV Focus: $220 million worth of properties leased to convenience-store operators; $75.3 million worth of properties acquired as of the middle of the year 24 COMMERCIAL PROPERTY NEWS • September 2008 • www.cpnonline.com http://www.transwestern.net http://www.transwestern.net 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.