{"id":1004247482,"date":"2018-08-06T03:42:08","date_gmt":"2018-08-06T11:42:08","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004247482"},"modified":"2022-12-09T02:32:42","modified_gmt":"2022-12-09T10:32:42","slug":"safety-net","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/safety-net\/","title":{"rendered":"Safety Net?"},"content":{"rendered":"

By Robyn A. Friedman<\/p>\n

\"\"<\/a>

A Cracker Barrel restaurant was one of three in Victorville, Calif., sold this spring by Marcus & Millichap.<\/p><\/div>\n

SEE MORE ON THIS TOPIC<\/a><\/p>\n

Investor interest in single-tenant net-leased properties (STNL) is nothing new. This type of asset has been desirable for some time, particularly for investors seeking a more passive commercial real estate investment that requires less day-to-day management. And, because the assets generally come with long-term leases and stable tenants\u2014many of which are in businesses that offer some protection against e-commerce, such as food and beverage or health care\u2014they are attracting not only the traditional individual investors who have favored this sector but also institutional investors such as real estate investment trusts (REITs), pension funds and others seeking investment-grade assets. <\/p>\n

Strong Fundamentals<\/h2>\n

STNL properties are probably about the most passive investment one can make in commercial real estate. As opposed to a gross lease, where the tenant pays rent and the landlord pays expenses, a STNL tenant is responsible for all of the expenses associated with the property, including taxes, insurance, maintenance and utilities. Hence, the tenant assumes control over the property, and the landlord doesn\u2019t have to actively manage it.<\/p>\n

STNL is good for landlords because it provides a steady stream of relatively passive income from a long-term, stable tenant, and it\u2019s good for tenants because they can exercise more control over their expenses, giving them autonomy over how their property is managed.<\/p>\n

Retail has traditionally been the most popular type of asset for STNL investors; Walgreens and CVS pharmacies are a common example. Discount stores, such as Dollar General, are common uses too, as are standalone restaurants such as McDonald\u2019s. Medical-office buildings and even industrial uses such as car washes and warehouses are also increasingly being used as STNL properties.<\/p>\n

Marcus & Millichap announced in June that it sold three net-leased restaurants between April 9 and May 18 in Victorville, Calif. The tenants are Cracker Barrel, BJ\u2019s Restaurant and Brewhouse and The Habit Burger Grill. Cap rates ranged from 3.45 percent to 4.5 percent. The three assets were built in 2017, and all had corporate-guaranteed, triple-net leases with 14 to 19 years remaining, making them very attractive investment to buyers.<\/p>\n

In addition to the net-leased restaurants, Marcus & Millichap also sold six net-leased medical-office buildings in Arizona between Jan. 25 and April 30 this year, for $27.115 million.<\/p>\n

\u201cNet-leased medical offices are extremely attractive investments, as medical professionals tend to invest heavily in their workspaces and commit to their locations,<\/em>\u201d said Jamie Medress, an executive director on the firm\u2019s net-lease investment team.<\/p>\n

What\u2019s driving investor interest in STNL?<\/h3>\n