GlobeSt.com Honors Net Lease Tenants

GlobeSt.com recently spotlighted some of the biggest Influencers across the commercial real estate spectrum, specifically in the area of net lease real estate. We honored individuals, teams and companies in the space and will honor them live in person at our Net Lease Spring event on April 5th in New York City. 

This year, we also asked our net lease honorees to provide insight into the tenants who they consider the best fit for properties and their landlords. In an effort to recognize those tenants, we asked each candidate to nominate a tenant that is coveted among landlords and to explain their particular selection.

The celebrated net lease tenant influencers, as nominated by their net lease peers are as follows and GlobeSt.com is pleased to honor them this year. 

7-Eleven—Put forth by many of this year’s net lease influencers, 7-Eleven is growing extremely quickly. According to Austin Blodgett, SVP of RealSource Group, the tenant is both internet resistant and e-commerce proof, and has had continued to grow sales throughout the pandemic. 

ALDI—Michael Scali, director of 1031 had this to say: “I think that the grocery sector is one that has been the darling of the retail industry for decades and it’s definitely here to stay. Even in the wake of meal kits and online grocery delivery services, the pandemic has proven that brick-and-mortar grocery stores are an absolute necessity. I love what ALDI is doing as a grocer, and I am a huge fan of the locations they are choosing as well as the leases they are signing”.

Amazon Go—According to one net lease firm, while there is currently a modest amount of inventory available to net-leased investors, with the innovation of partial automation at Amazon Go stores, allowing for a seamless, contactless checkout process, they will become much more abundant in the coming years.

Amazon—According to both Avison Young and CBRE, Amazon is a clear choice. In a time where the phrase “flight to quality” has become overused, GSA and Amazon deals get the most attention, says David Krasnoff, executive director at Avison Young. “The GSA because people are generally comfortable with the idea that the US Government will continue to grow and pay their rent and Amazon by its sheer dominance and the fact that just about everyone uses the services and is familiar with their platform.”

Caliber Collision—JLL Capital Markets’ Corporate Finance and Net Lease team put forth Caliber Collision as one of their most coveted tenants.

Carvana—Carvana is a great growth story and rapidly transforming the United States used car market by implementing innovative e-commerce strategies coupled with national logistics capabilities, says Fundamental Income’s co-founders.

Catholic Health Initiatives—This tenant was recommended by Ben Reinberg, CEO and founder of Alliance Consolidated Group of Companies.

Chick-fil-A—Hanley Investment Group says that Chick-fil-A is dominating the fast-food industry despite having a mere fraction of its competitor’s locations (Chick-fil-A currently has 2,600+ locations vs. 14,000+ McDonald’s).

Chipotle—Four Corners and Marcus & Millichap recommended Chipotle as a dream tenant. “They always seem to be pushing innovation for consumer interaction,” says Joshua Zhang, director of acquisitions at Four Corners Property Trust.

CVS—“The combination of how they run their business, and how they select their real estate, is matched by very few in the real estate industry,” says ARCTRUST.

DaVita—According to Stan Johnson Co.’s Scott Briggs, DaVita will continue to grow in popularity with net lease investors in the coming years. Approximately 90% of its dialysis revenue is covered under some governmental program with 74% coming from Medicare or a Medicare-assigned plan, he says. “The vast majority of its locations we see in the net lease space are outpatient dialysis clinics where the core business is very revenue-neutral and well-insulated from macroeconomic movements, which in turn provides investors and lenders a surety of rental payment unparalleled by many other users in the net lease space.”

Dollar General—Dollar General, according to Bryan Bender, a partner and managing director at Fortis Net Lease, has thrived and proved to be a leader during the pandemic. “Their business model & site selection is meticulous to generating success.” And according to Josh Bishop of Matthews Real Estate Services, Dollar stores not only thrive in a strong economy, but they also realize stable growth in times of recession. “This makes for both an attractive and reliable, nearly risk-free triple net investment,” he says. 

FedEx—A few of our net lease influencers this year said that FedEx offers great credit profiles for owner/landlords.

Fresenius Medical Care—This tenant is one of the high-quality tenants who signs long-term leases, invests in their properties and contribute to a steady and reliable revenue stream, says Ben Reinberg of Alliance Consolidated Group of Cos.

Gerber Collision—One influencer says that Gerber Collision is strong because they have insurance company relationships, didn’t miss any payments during the pandemic, and their businesses are run conservatively. In addition, the influencer says, the company runs long term leases and serves as an industry leader in environmental stewardship and safety.

HCA Healthcare—Ben Reinberg of Alliance Consolidated Group of Cos. recommended HCA Healthcare as a high-quality tenant with a steady revenue stream.

Home Depot—One net lease influencer says that he appreciates the intelligence and diligence the deal teams that Home Depot, who “work tirelessly to ensure the best results for all parties involved.”

Jack in the Box—According to Kidder Mathews’ Joshua Berger, Jack in the Box continues to have a strong presence throughout the country, holds strong corporate guaranteed leases and “has the best and most responsive real estate department out of many nationally branded QSR tenants.”

Lowes—According to one net lease expert, Lowes has shown intelligence and diligence and has maintained consistent deal teams in an industry which is often known for churn and turnover. “It helps them always be ahead of the curve and know ‘where the puck is going,’” the source says.

McDonalds—McDonald’s has always been a partner and even when everyone else was asking for rent relief during 2020, they maintained their lease commitments, says Joshua Zhang of Four Corners Property Trust.

Microsoft—JLL’s capital markets team nominated Microsoft as a high quality tenant.

Novant Healthcare—This tenant is another example of a high-quality tenant who has a reliable revenue stream, says Alliance Consolidated Group of Cos.

O’Reilly Automotive—According to Patrick Luther of SRS, O’Reilly Automotive is currently one of the most active tenants.

Panera—“One tenant that stands out is Panera, a quality tenant that landlords can feel confident in signing,” says Simon Assaf, associate VP of Matthews Real Estate Investment Services. “Panera is heading in a positive direction as they continue to adapt to consumer demand. The brand has introduced leading technology to make contactless pick-up and delivery options accessible and easy to use. Millennials are a driving force behind these initiatives.”

Patagonia—Jared Aubrey, a SVP at CBRE, says that Patagonia understands their customer base very well. “I believe they straddle the line of ‘cool’ and ‘credit’ and can often times be a draw to their respective properties that can benefit other tenants and bolster a property’s perception in the marketplace.”

Select Medical—According to one source, Select Medical is one tenant who signs long-term leases, invest in their properties and contributes to a steady and reliable revenue stream.

Sherwin Williams—According to Four Corners Property Trust’s Joshua Zhang, Sherwin Williams is one of the most quietly sound and secure tenants that can be in a portfolio with long-term staying power and a strong compelling business model.

Stanley Black & Decker Inc.–Stanley Black & Decker is a market leader in the tools industry with a portfolio of strong, recognizable brands, according to W.P. Carey. “Stanley has a strong credit and is rated A by S&P and Baa1 by Moody’s. It is also continuing to grow – which is something W. P. Carey looks for in its prospective tenants.”

Starbucks–Starbucks has a great reputation for selecting the best possible real estate options in a particular submarket and this added to their credit profile makes them an attractive investment option, says NLAG of Marcus & Millichap.

Target—“Target is a great retailer that has not only performed very well despite the challenges of the pandemic, but more importantly a tenant that has done a great job of utilizing brick and mortar stores to improve their omni-channel platform,” explains Jared Aubrey, a SVP at CBRE. 

Tractor Supply Co.—Tractor supply is one of the most active tenants, according to one net lease source. They have not only weathered the storm of the pandemic but thrived, says the source. “Tractor Supply has been a great tenant to work with and has always paid rent on time and maintained their properties at the highest standard.”

United Healthcare—Put forth by Alliance Capital, this tenant is a high quality tenant and trusted firm to have in a portfolio of net lease properties.

Walgreens—Many sources in the net lease space suggested Walgreens as one of the most active tenants in the net lease space. One net lease influencer says that the type of dominance and customer loyalty that they have in the market “makes the threat of new competitors slim.”

Walmart–According to one influencer, a tenant like Walmart is as “good as it gets” when it comes to an investment-grade tenant. “Being the largest retailer in the world, and one of the strongest companies in the country, Walmart is a blue-chip tenant that has an irreplaceable real estate portfolio.” 

Wawa—“There is a reason this tenant continues to trade at premium cap rates in the marketplace and why they continue to expand their business,” says ARCTRUST.