GlobeSt.com EXCLUSIVE: Net-Lease Sector Velocity a Question

(To read more about the net-lease sector, catch up on NET LEASE forum.) NEW YORK CITY-It could have been two separate conferences, given the diversity of opinion over the sustainability of net-lease deal volume. But yesterday’s RealShare Net Lease conference was a single event offering widely disparate views on the future of the niche. What opinion held sway at the end of the day was really a matter of what side of the equation each of the nearly 300 attendees represented. RealShare Net Lease was sponsored by GlobeSt.com’s parent organization, Real Estate Media.An almost effervescent Town Hall panel featured a bullish Gary Ralston, president and COO of Commercial Net Lease Realty, stating that current niche velocity is $20 billion and that there is “significant room for opportunity.” US Realty Advisors president Laurie Hawkes agreed, pointing out that this volume is straight across the board, encompassing “anything that’s a sale/leaseback or net lease.” She added that while pinning a specific number to the size of the market is “difficult to guess, volume is huge–much bigger than what is actually being reported,” since only a fraction of the deals–largely those represented by the public side of the market–are being publicized.Not so fast, stated Mesirow Capital senior managing director Gary Cohen in the following session, a decidedly more sober Capital Markets Outlook. “Things are not nearly as positive as the panel before us indicated,” he told the assembled crowd. “As much equity and debt as is out there, execution is much more problematic,” due in part to such factors as more demanding and a “bolder” tenant base.That’s now. Later, as interest rates start to rise, the market will get even more problematic, other panelists agreed. “They’ll have to impact cap rates,” stated Paul McDowell, CEO and senior managing director of the newly public Capital Lese Funding, “and that’s going to make a lot of people unhappy when they go to finance properties they bought today at a 6% cap rate.” The session was moderated by Legg Mason Wood Walker managing director Richard Jacobs and hosted by Real Estate Media editor in chief Michael G. Desiato. The morning kicked off with a keynote address by Lubert-Adler Management principal Dean Adler.