NEW YORK CITY—Comparing the ramifications of the possible end of 1031 exchanges to spending all of eternity in hell, RealShare Net Lease keynote speaker G. Joseph Cosenza, vice chairman and president, The Inland Real Estate Group & Inland Real Estate Acquisitions, kicked off the conference on Wednesday in Midtown with a lively start.
Impassioned discussions continued throughout the day, with investors and brokers clearly taking a liking to the industrial sector, so much so that their definition of it was expanded from typical parameters. Creativity also was on tap when net lease players expressed great interest in the healthcare space while shifting their perception of the retail space.
“This is the biggest problem facing everyone in this room,” asserted Cosenza of potential tax reform. “It's a devastation to everyone in the real estate business.”
More specifically, he added, “This affects the small guys, REITs, trucking companies and businesses that want to expand and buy a building.” It also will lead to a loss of real estate taxes and other collected in property trades, he said.
The appeal of the industrial sector appeared to be on many attendees' minds. “If a company winds up in Chapter 11, the first lease they're going to affirm is their factory,” noted Richard Rouse, vice chairman & CIO, Lexington Realty Trust.
At Gramercy Property Trust, CEO and chairman Gordon DuGan, mentioned a salvage yard as a viable net lease investment, noting that the investment is backed by a nearly investment grade owner.
Meanwhile, medical office is capturing investors' attention. “Plasma centers are an emerging area,” asserted David Piasecki, CIO, ElmTree Funds. There's a hole in the market and healthcare REITs are having a difficult time with public REIT share prices.”
Some net lease players are consciously steering clear of retail out of concern over the competition created by ecommerce. But others are bullish on the space, particularly when it comes to food establishments.
“We own about 800 sites leased to restaurant operators and have added to that in the last 120 days,” asserted Craig Macnab, chairman and CEO, National Retail Properties. “We're doubling down on small box retail.”
Added fellow REIT Power Panel speaker Amy Tait, chairman and CEO, Broadstone Real Estate, “We have ramped up in casual dining; our portfolio is about 25% restaurants. These are long-term leases with good rents and they're three times EBIDA coverage.”
Much was made of tenant credit throughout the day, but sometimes that isn't the best indicator of success, some speakers said.
“The difference in rent you'll receive over 10 years from a double B-grade tenant versus a triple b-grade tenant is basically zero,” declared Benjamin Butcher, CEO, president and chairman of the board, STAG Industrial.
Agreed Thomas Nolan Jr., chairman and CEO, Spirit Realty Capital, “The designation of a so called 'unrated, non-investment grade tenant' doesn't mean that firm is not a great tenant. We're delighted with the opportunities we're seeing today.”
Check back in with GlobeSt.com on Monday for more RealShare Net Lease coverage.
Impassioned discussions continued throughout the day, with investors and brokers clearly taking a liking to the industrial sector, so much so that their definition of it was expanded from typical parameters. Creativity also was on tap when net lease players expressed great interest in the healthcare space while shifting their perception of the retail space.
“This is the biggest problem facing everyone in this room,” asserted Cosenza of potential tax reform. “It's a devastation to everyone in the real estate business.”
More specifically, he added, “This affects the small guys, REITs, trucking companies and businesses that want to expand and buy a building.” It also will lead to a loss of real estate taxes and other collected in property trades, he said.
The appeal of the industrial sector appeared to be on many attendees' minds. “If a company winds up in Chapter 11, the first lease they're going to affirm is their factory,” noted Richard Rouse, vice chairman & CIO, Lexington Realty Trust.
At Gramercy Property Trust, CEO and chairman Gordon DuGan, mentioned a salvage yard as a viable net lease investment, noting that the investment is backed by a nearly investment grade owner.
Meanwhile, medical office is capturing investors' attention. “Plasma centers are an emerging area,” asserted David Piasecki, CIO, ElmTree Funds. There's a hole in the market and healthcare REITs are having a difficult time with public REIT share prices.”
Some net lease players are consciously steering clear of retail out of concern over the competition created by ecommerce. But others are bullish on the space, particularly when it comes to food establishments.
“We own about 800 sites leased to restaurant operators and have added to that in the last 120 days,” asserted Craig Macnab, chairman and CEO, National Retail Properties. “We're doubling down on small box retail.”
Added fellow REIT Power Panel speaker Amy Tait, chairman and CEO, Broadstone Real Estate, “We have ramped up in casual dining; our portfolio is about 25% restaurants. These are long-term leases with good rents and they're three times EBIDA coverage.”
Much was made of tenant credit throughout the day, but sometimes that isn't the best indicator of success, some speakers said.
“The difference in rent you'll receive over 10 years from a double B-grade tenant versus a triple b-grade tenant is basically zero,” declared Benjamin Butcher, CEO, president and chairman of the board, STAG Industrial.
Agreed Thomas Nolan Jr., chairman and CEO, Spirit Realty Capital, “The designation of a so called 'unrated, non-investment grade tenant' doesn't mean that firm is not a great tenant. We're delighted with the opportunities we're seeing today.”
Check back in with GlobeSt.com on Monday for more RealShare Net Lease coverage.
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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.
