In a luncheon Q&A session with Suzann D. Silverman, editor-in-chief of Commercial Property News, at Monday\u2019s Net Lease Summit in New York, CapLease Inc. chairman & CEO Paul McDowell (pictured) said he is glad that his firm has kept its focus on working with investment grade tenants, given that the stressed economy will likely put pressure on below-investment-grade companies. CapLease has a diversified portfolio of net lease assets, with a $2.1 billion investment grade portfolio that consists of $1.6 billion of owned properties, $291 million in mortgage loans, and $170 million in structured securities. McDowell said there has been a significant move upward in cap rates for non-investment grade net lease properties, but cap rates for investment grade have been relatively stable. Properties in certain sectors, though, are facing stress, he said. \u201cThere is pressure on the retail sector,\u201d McDowell said. \u201cThere has been a lot of building.\u201d When asked what he saw as high and low risk industries, McDowell said he likes corporations that are engaged in the \u201chard economy,\u201d such as a manufacturers. CapLease\u2019s largest corporate exposure is to Nestle, while its biggest tenant is the U.S. government, he said. According to McDowell, some investors wanted CapLease to grow faster by investing in real estate with non-investment grade tenants, but he resisted buying assets at too-low cap rates. \u201cIt\u2019s like the nerd with glasses,\u201d McDowell said. \u201cHe\u2019s starting to look good.\u201d When asked by Silverman who his major competitors were, he said that well-capitalized, publicly traded companies, such as his and W.P. Carey were in the best position, and that the market should see a fallout of \u201chigh leverage, low equity players.\u201d \u201cTICs have been gone for a while,\u201d he added. McDowell sees lending terms continuing to move toward more caution, particularly with the larger role that pension funds and life insurance companies are playing. These providers are \u201ccautious by nature,\u201d he said. With the capital crunch making lending proceeds scarce, McDowell said that lending terms that borrowers thought of recently as too stringent, such as loans with 20 or 25-year amortization, \u201care now starting to look good.\u201d And while the commercial real estate sector is presented its share of challenges, he expressed optimism. \u201cIn five years, I think we\u2019ll be pleased with where we are.\u201d Asked for any words of advice, he said \u201cThis too will pass.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
In a luncheon Q&A session with Suzann D. Silverman, editor-in-chief of Commercial Property News, at Monday\u2019s Net Lease Summit in New York, CapLease Inc. chairman & CEO Paul McDowell (pictured) said he is glad that his firm has kept its focus on working with investment grade tenants, given that the stressed economy will likely put…<\/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":[37301],"tags":[],"class_list":["post-1003853683","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n