The publicly registered, non-traded REIT will purchase both sale-leasebacks directly from corporate occupiers and existing net lease assets from third parties, though its preference is for sale-leasebacks, since those allow the REIT to structure its own leases. It is targeting "mission critical office and industrial properties that are net leased to corporate tenants for long duration," says Griffin Capital president Kevin Shields.
It's those kinds of assets—diversified by tenant credit quality, industry, geography, lease duration and property type—that will provide "a very stable return dynamic for us and our investors," Shields tells GlobeSt.com.
While Griffin Capital management had considered launching a net lease REIT a few years ago, it ultimately waited until this year. One main reason for shelving the REIT earlier was the low cap rate environment in which properties were selling. To be able to pay shareholders a reasonable dividend, properties would need to be purchased in the range of 8.65% to 8.7% caps, says Shields. "At the end of '07, there was nothing you'd want to own at that kind of cap rate," he adds.
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