the driver, which is, to a large extent,
multifamily sales, especially on the
coasts.” He doesn’t expect to see a
recovery in this segment until 2009.
“Part of the surge in 1031 demand
correlated to apartment sales in key
markets: California, Florida, New York
and Chicago,” Haddigan concurs.
“And the California and Florida markets have had a precipitous drop in
sales over the last 24 months. I
wouldn’t be surprised if exchanges in
’07 are down 25% to 30% over the prior
year,” he adds.
With some of the competition out of
the fray, long-time net lease players are
seeing this as an ideal time to raise more
equity to deploy into new acquisitions
this year. Prescott GNLP’s Olsen spent
the second half of 2007 focused on raising equity, amassing about $50 million
in November from institutions and offshore investors.
Olsen says this is a good time to be
raising funds for traditional, buy-and-hold net lease plays and is looking forward to putting that equity to work.
“With all this capital disappearing and
with corporations very much in need
of new real estate, we’re back in the
market,” he declares.
W.P. Carey is another firm actively
raising new capital, after a few years of
being largely out of fundraising mode.
The company expected to launch its
“With the capital
and access to
funding are in
the catbird seat.”
NATIONAL RETAIL PROPERTIES INC.
latest effort, for Corporate Property
Associates 17-Global Inc., by the end
of December, and to produce $2 billion of equity for between $4 billion
and $5 billion worth of property acqui-
sitions. “Net lease tends to be popular
at a time when money gets tight,”
DuGan notes. “That’s a reason to have
a new fund now.”
And this time around, market conditions are likely to be quite different than
they have been for the past few years.
“These are interesting times,” relates
Haddigan. “Right now, everybody’s
looking at the capital markets in terms of
the quality and quantity of debt. When
will it return to normal? I’m thinking it
will take until the end of the summer
before that happens. In the meantime, I
think more corporate owners will be
motivated to do deals.”
According to Blankstein, “We’re
heading back to normalcy, and for
those who thought late 2005 and early
2006 were normal, it’s going to be a
reality check.” ◆
Contributing editor Michelle Napoli is the editor
of Real Estate Media’s Net Lease Forum and TIC
Monthly. For more information, go to
Reprint orders: www.remreprints.com
Enter code F01086
ROCK YOUR WORLD.
Announcing BlueStone Real Estate Capital, the investment banking firm
for investors and developers who are big thinkers. We focus on providing
innovative financing to the top tier of real estate investors and operators
in the nation. BlueStone Real Estate Capital has the market knowledge,
credibility and relationships with highly regarded institutional capital
sources to secure the financing for any size (or shape) you desire.
To learn more about how we can help rock your world, please visit
bluestonecap.com or call Matthew McManus today at 215-717-2227.