LOS ANGELES—“I have looked at corporate campuses that have 18- to 24-month build time but certainly there are interest rate risks.” That is according to Zachary Pasanen, a VP at W. P. Carey.
Pasanen served on a panel at the recent RealShare Net Lease West conference about opportunities in sale-leasebacks and build-to-suits. Overall, panelists agreed they are “selective” when it comes to build-to-suits.
“We have to protect our downside, which is why we don't do a lot of build-to-suits at low yields going in,” Pasanen said. “That is why we do deals that are higher yielding… You benefit from that in the long term. We are also very selective at looking at build-to-suit rents versus market rents.”
When moderator Douglas M. Longyear, managing director of capital markets for the net lease group at Cushman & Wakefield, talked about sale-leasebacks, he said that often times, a company is looking for what they are carrying the real estate on their books at and aren't looking for a gain. “Often times, sale-leasebacks can be below replacement costs, but in a build-to-suit, often times the developer is trying to get some profit which they are certainly entitled to.”
Robert G. Vanecko, managing principal of Brennan Investment Group, said that whatever the deal, his firm likes the kind of deals where they can get in at an attractive basis and keep the rent low for the tenant and not just max the proceeds.
As for what types of tenants and what types of qualitative things Vanecko looks for? He said that he is attracted to companies that have been in business for a long time and that have made it through a number of cycles. “We like companies that have a diversified customer base with businesses that seem growing but stable. We like businesses that are not going to become obsolete in a few years (which is hard to judge) and companies that have a niche and a value-add product that isn't just a commodity that someone will figure out how to make cheaper.”
LOS ANGELES—“I have looked at corporate campuses that have 18- to 24-month build time but certainly there are interest rate risks.” That is according to Zachary Pasanen, a VP at W. P. Carey.
Pasanen served on a panel at the recent RealShare Net Lease West conference about opportunities in sale-leasebacks and build-to-suits. Overall, panelists agreed they are “selective” when it comes to build-to-suits.
“We have to protect our downside, which is why we don't do a lot of build-to-suits at low yields going in,” Pasanen said. “That is why we do deals that are higher yielding… You benefit from that in the long term. We are also very selective at looking at build-to-suit rents versus market rents.”
When moderator Douglas M. Longyear, managing director of capital markets for the net lease group at Cushman & Wakefield, talked about sale-leasebacks, he said that often times, a company is looking for what they are carrying the real estate on their books at and aren't looking for a gain. “Often times, sale-leasebacks can be below replacement costs, but in a build-to-suit, often times the developer is trying to get some profit which they are certainly entitled to.”
Robert G. Vanecko, managing principal of Brennan Investment Group, said that whatever the deal, his firm likes the kind of deals where they can get in at an attractive basis and keep the rent low for the tenant and not just max the proceeds.
As for what types of tenants and what types of qualitative things Vanecko looks for? He said that he is attracted to companies that have been in business for a long time and that have made it through a number of cycles. “We like companies that have a diversified customer base with businesses that seem growing but stable. We like businesses that are not going to become obsolete in a few years (which is hard to judge) and companies that have a niche and a value-add product that isn't just a commodity that someone will figure out how to make cheaper.”
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.