because of lack of product will suddenly
feel more pressure.”
Seibert says it’s hard to give advice that
would apply to all categories of net-lease
investors since they differ so much in
investment amounts and what they seek.
“If you have a modest amount of money to
spend, your best bet would probably be to
purchase a liquid, public NNN REIT if
you wanted exposure to the sector. You
get yield, diversity of owning a small piece
of a much larger portfolio and have the
results of almost instant liquidity. The tri-
ple-net REIT sector has shown a strong
history of raising its dividends, so increased
income is usually possible over time.”
Short of a financial crisis or some other
unforeseen event or dramatic rise in inter-
est rates, all other industry metrics seem
to be positive now, Seibert adds. “A lot of
the available retail, office and industrial
vacant space available after the financial
crisis has been absorbed, and companies
are starting to become active in new devel-
opment again.”
Hipp says properties in tertiary markets
that are not credit rated may offer better
yields, and it’s tempting to go there since
This announcement appears as a matter of record only.
EGM
EQUITY GLOBAL MANAGEMENT
there’s such a low supply of net-lease prop-
erties in general. Yet Schorsch recom-
mends looking mostly at newer assets that
have a longer life and will be occupied for
longer periods. “Stay away from tertiary
markets, and stay in primary markets
where there’s much better occupancy.”
McDowell and DuGan agree that not
all net-lease companies are the same, and
it behooves the potential investor to
examine the different investment strate-
gies and values relevant to total net-asset
value of net-lease firms. “Some are more
valued in the market and have values that
can’t go up, and others are less valued
and have values that can go up,” says
McDowell. “When you look at the public
net-lease sector, you have to look at it
company by company and look at the
strategies they produce and where their
companies are trading, rather than just
net asset value.”
$500 MILLION
of
NET LEASE BUILD-TO-SUIT
SALE-LEASEBACK
assets targeted during Q2 2013
Acquisitions Forward Commitments Gap Equity
“The
knockoff
on net
lease
assets for
years has
been fixed cash flows,
so portfolios have bond-
like characteristics.”
FOR MORE INFORMATION VISIT:
www.egm-funds.com!
PAUL MCDOWELL
Caplease
EGM is a private equity real estate investment firm professionally
managing net lease investment programs for institutional and
individual investors.
Mark Howell
Managing Director
312-827-2274
mhowell@egm-funds.com
Shelby Pruett
Managing Principal
312-827-2270
spruett@egm-funds.com
John Puntillo
Managing Director
312-781-9833
jpuntillo@egm-funds.com
A Sale-Leaseback and Net Lease Leader
_____________________________________________
Equity Global Management, LLC
200 W. Madison, Suite 3250, Chicago, IL 60606
DuGan recommends looking past the
net-lease label and examining the firm’s
management team—look for one that has
managed a business through cycles—as
well as how acquisitive that firm is today.
“What type of assets are they buying?”
He also recommends looking at things
like dividend coverage, lease rollovers and
asset quality and basis. “There’s better
value in industrial and office net-lease
assets as single-tenant retail assets have
seen cap rates fall faster and further than
other net-lease asset types. So Gramercy is
focused on single-tenant industrial and
office assets, and that is where we have a
ton of experience.” ◆
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