Here are some quick reactions from this year’s RealShare Net Lease Conference in New York covering three main topics – debt, the economy and the future net lease outlook.

Debt

  • While the NNN space is as active as it has ever been, there is actually an upper limiter on deal size. Deals over $200M seem to be fairly challenging.
  • CMBS is back, but still faces some challenges. Most originations are in the $1.5B area and S&P has indicated that it would like to see individual loans remain below 5% of the total origination.
  • 50% of all CTL financing originated in the past few years has been for drug store locations.
  • Financing terms easing up for investment credit NNN deals. Terms not as flexible for non credit deals.

Economy

  • In order for real economic growth to take place, we need job growth. The jobs we will grow will not be the jobs we lost, but more specialized, high tech jobs.
  • In terms of job recovery, we are still at a worse position than at the depths of the 1950’s recession.
  • Uncertainty around the political agenda going forward can cause a disruption in the markets towards the end of the year.

Net Lease Outlook

  • Net Lease markets remain strong for investors.
  • Cap rate compression is very real, and cost of capital will continue to bifurcate the private versus institutional investors ability to acquire class A assets.
  • Demand for non credit and secondary markets will increase, compressing the spread between class A and class B assets
  • More institutional capital moving into NNN space.
  • Built-To-Suit market is seeing uptick, but sale/leasebacks face competition from the bond markets.
  • Institutional buyers looking more at industrial, office and senior housing net lease alternatives.

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Jonathan Hipp

Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.

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