MacDonald. “If lenders hold that position, it’s probably going to translate back
to the tenants.”
On the equity side, high leverage
buyers who had been enjoying their
day in the sun no longer have an
advantage. The best opportunities,
says Blankstein, aren’t so much about
property or tenant type or location, but
where your money is coming from,
meaning that cash and low-leverage
buyers are in the best position to get
deals done right now.
Blankstein should know. Boulder
Net Lease Funds’ new joint venture,
formed in the late spring with Orix
Real Estate Capital Inc. of Chicago, is
an all-cash buyer. There may be fewer
deals to go around right now, but such
investors can do better competing for
them since they’re not dependent on
obtaining debt. “We’ve been much
COMPANIES, INC.
Acquisitions by W.P. Carey & Co. last year
included transactions with a number of German
companies. Among them were a $31-million
sale-leaseback of the headquarters and a
warehouse property of Lindenmaier AG (left),
and a $445-million deal with Hellweg Die Profi-Baumarkte GmbH & Co. and affiliates (above)
that involved the purchase of an interest in
Hellweg’s real estate subsidiary and a loan col-lateralizing 37 properties.
more competitive,” he asserts.
Thomas also believes that all-cash
buyers have a newfound advantage.
“We’re seeing those folks picking up
quite a few transactions,” he says. And
Macnab agrees, too. “Clearly with the
capital constraints in the market, companies that have strong balance sheets
and access to funding are in the catbird
seat,” Macnab notes. “The last two
years were an artificial environment
with plentiful debt available on very
inexpensive terms, so now we are
reverting to a more traditional environment where cash buyers such as ourselves are in a much stronger position.”
Meanwhile, there is wide agreement
that one buyer group likely to not be as
active in the net lease market as in
recent years is the 1031-exchange
investor. After several years of considerable growth, volume appeared to
decline in 2007 and it is not expected
to increase this year. According to the
professionals, that’s because the peak
of the market has already passed and
the fact that a significant amount of
exchange activity is driven by the residential sector, which is now on the
downswing.
Blankstein notes that this will have
the greatest impact on those properties
valued at less than $5 million and predicts “dramatically lower volume
throughout the whole year. I don’t see
