One Firm Sources Over $80M of Net-Leased Properties in February

JRW Realty is seeing an influx of large, cash buyers seeking grocery-anchored shopping centers and net-leased properties with investment-grade and essential businesses.

JRW says these clients’ accessible balance sheet capital enables them to close transactions in 20 to 30 days after going under contract.

In February, JRW was very active as it facilitated the acquisition of approximately $80.2 million in net-leased properties, covering 11 states and spanning more than 323,000 square feet. Their tenants included companies like Dollar General, Lowe’s, and Whole Foods. It has now closed more than $2.2 billion in transactions.

“We are proud to have successfully sourced 15 properties operating essential businesses last month that meet our buyers’ acquisition standards,” said Melinda Marston, president of JRW Realty, in a prepared statement.

Brokers in the net lease space saw the market return to life in Q4 2020 as buyers who had been on the sidelines began searching for assets. That set the stage to the strong start to 2021.

“Q4 has been total mania,” says Camille Renshaw, CEO and Founder of B+E said late in 2020. “I don’t think I’ve ever seen so much going on. Loads of large 1031 exchanges are in the market. We have smaller ones too, but these are probably the most $50 and $60 million exchanges we’ve had.”

In Q4, the sector recorded $20.5 billion in investment sales, which put it at $60 billion for the year, according to The Stan Johnson Co. Early in the year, observers’ thought it would be lucky to hit $50 billion in sales. 

Institutions drove this end-of-year demand. While private buyers were still the largest net buyer at 38%, institutions came in a strong second at 28%.

“Pent-up demand is likely an unfair way to categorize marketplace conditions,” says BJ Feller, managing director and partner for Stan Johnson in Chicago, Ill. “We see the demand as a continuation of what was witnessed in the second half of 2020. An approaching return to normalcy in late 2021 could be a godsend for the net lease investors allowing capital to flow into some of the tenant segments that had been largely illiquid in 2020, such as fitness and restaurants.”

Ryan Butler, managing director and partner for Stan Johnson in Tulsa, Ok., says investors are beginning to evaluate the sectors hardest hit from the pandemic.

“We’re starting to see investors dip their toes into segments similar to, and including, gyms,” Butler says. “Data from Placer.ai suggests that people are returning to fitness facilities and working out in gyms again. So, with higher returns currently available to investors, and better unit-level economics, we think this will be one area that starts to become more heavily traded, especially as the COVID-19 vaccine rolls out.”