BALTIMORE-Marcus & Millichap Real Estate Investment Services has sold nine single-tenant net-lease properties for a total of $44.6 million. The transaction was not a portfolio sale, Marcus & Millichap broker Mark Taylor, in the firm’s Philadelphia office, tells GlobeSt.com. Still, though, the nine separate sales speak volumes about the trajectory of the single-tenant net-lease market and investors’ growing love affair with it.
“Single-tenant net lease has become the darling of the investment community because of its stability of returns, low interest rates and demand for the assets,” Taylor says. Demand has been fueled by 1031 and 1033 buyers as well as investors leaving non-real estate fixed-rate instruments such as corporate bonds.
Then there are the properties’ locations. “When an asset's in a major market such as Maryland and Delaware you'll get stronger interest because of the demographics involved,” he says, ticking off such factors as population trends and the Mid-Atlantic’s stable regional economy.
However interest rates are the single most important factor fueling this current cap rate compression cycle for the single tenant net lease space, Taylor goes on to say. With interest rates hovering around 3% for many properties and cap rates in the 5.7- to-6.25 range it is a no brainer, he says. The nine properties that traded in the Spring went for cap rates that ranged between 6 and 6.84. Taylor says if they had sold now they would have gotten better terms.
The properties were:
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
