Net Lease REIT ETF Carves Lane For Greater Investor Access
NETL, a net lease REIT ETF, is just getting started as they raise awareness about their strategy and the net lease sector, which is slated for significant growth as more and more real estate properties come online, and interest from investors seeking to deploy capital heightens.
NEW YORK CITY – NETLease Corporate Real Estate ETF (NETL), a net lease real estate investment trust and exchange-traded fund, has taken aim at the net lease sector with its debut on the New York Stock Exchange almost a year to its upcoming first anniversary in March.
REIT executives Chris Burbach and Alexi Panagiotakopoulos of Fundamental Income, the index/sponsor to NETL, are just getting started as they raise awareness about their strategy and the net lease sector, which is slated for significant growth as more and more real estate properties come online, and interest from investors seeking to deploy capital heightens, they tell GlobeSt.com.
“When we started out Alexi and I saw a slice of the market left behind and created an ETF where funds can channel directly into the space,” said Burbach. “More and more people that are retiring need income and also need to preserve their capital and net lease is perfect for those types of investors.”
NETL aims to track the performance, before fees and expenses, of the Fundamental Income Net Lease Real Estate Index (NETLXT). The index tracks the performance of the U.S. listed Net Lease real estate sector, screening for real estate companies that focus on investments in net lease real estate and then incorporating them into the Index. The Index places constraints on constituents to protect against concentration in any one company or tenant.
NETL defines net lease REITs as equity REITs that own properties leased to single tenants under long-term, net lease agreements that hold the tenant responsible for most, if not all, property expenses. Most common among net leases is a “triple-net lease,” which requires the tenant to pay property taxes, insurance, and maintenance – the three nets in a lease agreement.
Burbach and Panagiotakopoulos raised $40 million in an estimated 10 months, meeting with investors and financial advisors. In the beginning, it wasn’t easy, but both of them knew it would take educating the market about net lease investments because the sector isn’t widely known, they tell GlobeSt.com.
“Most people don’t know what net lease is,” Panagiotakopoulos said. “I’d say one out of seven advisors have never heard of net lease in general, so it is a very educational process for them. And we’ll continue to become educators and bring awareness to the strategy and the sector.”
The firm’s motto is “Invest in the Real Estate of America,” and the firm sees great growth in the national market. According to Panagiotakopoulos, the overall market top-down is a $3.8 trillion market, in which the public market addresses $150 billion of it at less than 5 percent. Every year there is $60 billion in new real estate that comes online and needs institutional care. In 2008, there were 11 net lease companies, today there are 23 companies. The net lease market went from $19 billion in assets to $150 billion in assets.
“When you invest in net lease, you’re investing in everything we use,” he said. “I don’t know anything more American than the New York Stock Exchange.”