Net-lease sales may be down from those easy-credit days before the summer of 2007, but Howard Sands, founding principle of Los Angeles-based Corporate Partners Capital Group Inc., thinks that the lower deal volume still includes a good many relatively healthy net-lease transactions. As both sellers\u2019 and buyers\u2019 expectations come closer together, the market is approaching a new equilibrium, he says. Sands\u2019 own company, which engages in both single-asset and portfolio net-lease transactions, has been an active participant in the market itself recently, typically buying one-off net-lease properties ranging from $5 million to $100 million and portfolios of up to $300 million; it has also been a seller of certain assets. The bulk of the company\u2019s activities are now on behalf of CPCG I, a new $300 million fund backed by private capital. Recently CPNspoke with Sands about the net lease market. CPN: What\u2019s the market like for one-off, single-tenant transactions? Sands: Until last year, sales were at historically high levels as owners sold properties, especially to move into more passive real estate investments as part of estate planning. That isn\u2019t news. But what we need to emphasize now is that there\u2019s still demand for single-tenant, one-off deals, as well as small portfolios, though of course it\u2019s less than a year ago. Investors are especially selling fewer apartments, for instance, because they\u2019re looking for fewer 1031 exchanges. So there\u2019s less supply. But there\u2019s also less demand, considering the state of debt finance. We\u2019re at, or nearing, a new equilibrium point. In our own experience, we\u2019re selling properties on a one-off basis, and in small portfolios \u2013 and those are healthy deals. We\u2019ve adjusted our expectations compared with a year ago, and we\u2019re getting it right \u2013 buyers are interested. CPN: Is there any tilt toward a buyers\u2019 or sellers\u2019 market? Sands: Neither, with an important caveat. It depends on what you have, as a seller, since there\u2019s a flight to quality. If you have a double net-lease, or eight years to go on your lease, it\u2019s a buyers\u2019 market. On the other hand, if you have strong national tenants with good net leases, say 15- to 20 year-terms, with rent bumps, the market\u2019s going to tilt in your direction.CPN: What do you see looking ahead? Sands: The question is, will the supply-demand crossover be at a higher or lower valuation? That\u2019s hard to predict. As an owner, I don\u2019t think values are going to tank, because debt is already hard to come by for buyers — now you can get only about 60 percent debt, and it requires a personal guarantee. Buyers are now willing to do that. In the future, non-recourse debt will come back, however \u2013 but it\u2019s hard to guess exactly when or in what form. It\u2019s like predicting interest rates.<\/p>\n","protected":false},"excerpt":{"rendered":"
Net-lease sales may be down from those easy-credit days before the summer of 2007, but Howard Sands, founding principle of Los Angeles-based Corporate Partners Capital Group Inc., thinks that the lower deal volume still includes a good many relatively healthy net-lease transactions. As both sellers\u2019 and buyers\u2019 expectations come closer together, the market is approaching…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21825],"tags":[],"class_list":["post-1003844651","post","type-post","status-publish","format-standard","hentry","category-finance"],"acf":[],"yoast_head":"\n