NET LEASE REVIEW
Back to
The Future
MARKET PLAYERS ARE LOOKING FORWARD TO THE
RETURN OF BETTER PRICING, LESS COMPETITION
AND MOTIVATED SELLERS IN 2008. BUT IT MIGHT TAKE
A FEW MORE QUARTERS TO GET THERE.
By Michelle Napoli
LAST SPRING, BRUCE S. MACDONALD LOOKED AT A SINGLE-TENANT
R&D property that was being offered for sale in the $40-million to $50-million
price range and at a 6.25% cap rate. The deal went to another prospective buyer
but ultimately fell through, and in September the property crossed MacDonald’s
desk again. This time, however, the cap rate was 50 basis points higher and the
seller was offering financing, which is something that MacDonald, president of
Nashua, NH-based Net Lease Capital Advisors, says, “never happens.”
It was unusual, perhaps, but not a complete aberration. In early December,
MacDonald reported looking at a similar property for which the seller was also
offering financing. “They have reasons for wanting this property to move, and if
the capital markets aren’t going to provide funding, they will,” he observes.
This shift is reflective of a changing net lease property sector, one that is clearly
affected by an industry-wide decline in the availability of capital. While the first half
of 2007 was a seller’s market with plenty of activity and ample cheap debt, the credit
crunch that hit in the summer cooled things off considerably in the second half. But
