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New York City skyline
NEW YORK CITY—As quickly as it takes to spend a dollar, forces are shifting in net lease capital markets, driving participants to find new and creative ways to stay in the game. Several of them who will speak Wednesday at RealShare Net Lease here talked EXCLUSIVELY with GlobeSt.com about what they're seeing.
“The problems of CMBS are starting to filter down,” asserts Ralph Cram, president & managing member, Envoy NNN. “About $200 billion of loans are coming due by the end of 2017 and they either need to be resold or re-financed; banks are stepping into that.”
But there's only so much banks want to lend, he adds “and that's led to people not getting as many proceeds on construction loans or just not getting them—that's the trickle down.”
In another shift, Cram asserts, “In 1031 exchanges, they're bring more equity to the table than the usual 20-25% on $1 million to $6 million. We're seeing 35% to 50% of people bringing equity to the table or loans between 50 to 65%, there's a plethora of money to do those net lease traditional deals.”
Capital is coming from many different sources, adds Barclay Jones III, EVP, investments, iStar. “We've seen a number of interesting players over the past 15 months, including some foreign insurance companies and pension funds. The lack of interest rates in Europe and Asia are driving them into our market where returns are positive.
At his company, Jones adds, “We tend to focus on major markets and look at smaller markets on a transaction-by-transaction basis. It's hard to go into really tertiary markets without a great credit or real estate story.”
Net Lease Alliance is focused on the development side, says Ron Johnston, CEO and principal. “We provide, with development partners 100% of the capital—non recourse—for the sole purpose of getting a project built and sold. Our average life is 280 days.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
