Real Estate Forum - January 2013

aims to have a diversified portfolio, which helps reduce the company’s risk, and will not target any particular acquisitions.

However, the company tends to be interested in property sectors that other investors do not favor. In 2012, for instance, the REIT engaged in suburban office acquisitions that were attractively priced since the sector was not favored by many other investors.

“Considering that it was out of favor, we paid attention to real estate fundamentals and decided it was an attractive entry point. For 2013, it is difficult to predict which sectors will be less in favor relative to others,” Bond notes. In one such deal, the REIT acquired eight suburban Minnesota office facilities, totaling 1. 1 million square feet, for $169 million. The properties are triple net-leased to Blue Cross of Minnesota, with six of them located in the tenant’s suburban Minneapolis headquarters.

Select Income REIT also sees value in
suburban office properties, based on the
consideration that the lack of capital pur-
suing these deals gives the REIT a good
return. Another niche of interest to Select
Income is sale-leasebacks of corporate
ings that we believe are strategic to the
tenants,” Blackman explains. “Companies
tend to invest more capital in their corpo-
rate headquarters. And when they invest
capital in the building they tend to be
more likely to pay rent and renew their
leases at expiration.”
As these investors look forward to con-
tinuing their acquisition activity into 2013,
how do they expect to go about financing
their deals? For National Retail Properties,
a $500-million line of credit through a syn-
dicate of banks is the preferred source of
financing, and the REIT prefers not to take
on mortgage debt. As the line gets used up,
the REIT expects to pay it off by issuing
long-term debt or equity.

IN Q4-2012:

IN NEW INVESTMENTS

117

PROPERTIES

Our
guidance
is for $200
million
in 2013.
However,
we certainly hope we can
meet, and preferably
exceed, that.”

JAY WHITEHURST

Nationl Retail Properties

headquarters. Blackman reports that six of Select Income’s acquisitions, totaling $300 million for 2012, involved sale-leasebacks of corporate headquarter buildings, and he expects to continue doing these sorts of deals in 2013. “We will continue to pursue sale-leaseback transactions and the acquisition of corporate headquarters or build-

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Island
6 MILLION

SQUARE FEET
Gramercy Capital Corp. (NYSE:GKK)
is a public real estate investment trust
specializing in the acquisition and
ownership of net leased commercial
real estate located throughout the United
States. We are actively looking to acquire
office and industrial assets net leased to
high quality tenants across the country.