Net Lease Podcast

Net Lease Market News Net Lease Market Podcast You'll be happy to know iTunes has posted our new podcast under New & Noteworthy for Business > Investing, as seen in the attached screen cap. This episode features Jonathan Hipp and Sam Chandon reviewing 2012 and looking forward to 2013. Here is the iTunes link where you can listen: https://itunes.apple.com/us/podcast/calkain-net-lease-podcast/id631770417 I encourage everyone to take advantage of this new media outreach model and participate in future episodes. If there is a topic you'd like to promote - could be anything including tenants, locations, market trends, advice etc - just let me know and I'll get you on the air. Thanks!

Net Lease Investments for 1031 Exchange Client

Net Lease Market News Acquisition of Two Net Lease Investments for 1031 Exchange Client Calkain Companies, a national net lease real estate brokerage firm, recently brokered the sale of two triple net lease investment properties as part of a 15-month 1031 exchange assignment. The acquired net lease properties include a Wawa ground lease located in North Wildwood, NJ, and an Applebee’s restaurant located in Merritt Island, FL. Both assets were purchased in the fourth quarter of 2012, and totaled nearly $8MM in value. Calkain’s Andrew Fallon, Assistant Vice President, exclusively represented the purchaser, who sold their family-owned car dealership property on August 30, 2012. The family dealership site, located in the Washington, DC suburbs, was sold to a developer whose future plans include a 6-story residential building with structure parking. Back in 2009, Calkain first met with the family to advise on the possibility of a tax-deferred 1031 exchange strategy, which would satisfy the objectives of multiple family members and provide stable income through passive ownership of net lease investments. In 2011, Calkain was engaged to administer a full range of services to ensure a successful reinvestment of the sale proceeds. During the 15-month assignment, Calkain’s Fallon identified net lease investment opportunities, provided in-depth acquisition analysis and underwriting, and provided transaction support services throughout the different phases of the acquisition process. Utilizing the Calkain platform, Fallon ultimately facilitated a successful 1031 exchange totaling nearly $8MM. The family elected to purchase two long-term net leased properties for the stable income produced by the passive investment properties. The Wawa in North Wildwood, NJ was acquired in October. Per the absolute triple net terms of the ground lease, Wawa is obligated to build a brand new store in early 2013, and commence rent for a term of 20-years with structured rental increases. In November, the family closed on their second acquisition, completing their 1031 exchange strategy. The second asset, an Applebee’s restaurant, is uniquely located on the inter-coastal waterways in Merritt Island, FL. Like the Wawa, the Applebee’s property is subject to a 20-year absolute net lease with structured rental increases. The combined Wawa and Applebee’s rental income will provide nearly $500,000 of annual income. These transactions occurred within the last sixty days and will be recorded in the public records. WWW.CALKAIN.COM

Barclay Jones on the Net Lease Market

Net Lease Market News Q: How do you view the net lease market today? A: The net lease market today continues to be pretty strong, and demand for income product generally remains high. The net lease market does distinguish between the quality of income streams and leverage levels are very sensitive to credit quality. Certain product types have stronger demand characteristics as well, with a general preference for well-located industrial. Q: How do you view the net lease market in 6-12 months? A: Over the next 6-12 months, I expect rates to stay low and the market to continue to have demand for yield product. Hopefully, the recovery will begin to gain strength and we will see continued recovery in the housing market as well. With continued recovery, I expect that eventually rates will firm up in anticipation of a stronger economy. Cap rates should rise slightly as well, but I expect the net lease market to continue to be vibrant. Q: What important factors should people be watching for? A: Caution is warranted with the experience of the European real estate and debt markets. Relatively modest vacancy and performance downturn have been met with serious market disruption due to the sovereign debt crisis and ensuing bank recapitalization issues. The US securitization market continues to recover, but this bears a close watch. Q: What trends do you see carrying on into the future? A: The demand for yield product and below long term trend economic growth appear to be trends that will carry into the near term future. Technology and the internet will continue to effect real estate markets as the world evolves with the web. Major metropolitan areas continue to benefit from the tech concentrations and the employment concentrations they create. www.calkain.com

Commercial Property Sales Outlook

Commercial Property Sales Outlook for U.S. Cut by ULI The Urban Land Institute cut its forecast for U.S. commercial real estate sales by 12 percent to $748 billion through 2014 because projections for economic growth are “down considerably” from six months ago. Deals for properties such as office buildings, shopping centers and warehouses probably will be $223 billion this year, $250 billion next year and $275 billion in 2014, according to a ULI survey released today of 39 economists and analysts from real estate investment, advisory and research firms. In a March report, sales were forecast at $250 billion this year, $290 billion next and $312 billion in 2014. REIT Returns One projection boosted from the last survey was for the performance of real estate investment trusts. Annual returns for equity REITs are forecast to be 15 percent this year and 10 percent both next year and in 2014. That’s up from the previous forecast of 10 percent this year, 9 percent next and 8.5 percent in 2014, the institute said. http://www.businessweek.com

Rich Folks Go Where Pensions Dare Not

Net Lease Market NEWS As big institutional investors pull back from investing in high-risk real-estate funds, these funds are turning to a new source for capital: rich people. Starwood Capital Group, Lone Star Funds, Carlyle Group CG -0.59% and others have raised billions of dollars over the past several months from wealthy individuals seeking to get in on the firms' newest "opportunity" funds, which buy or develop riskier properties and use higher levels of debt in hopes of reaping high returns. http://online.wsj.com/article

Commercial Real Estate Loan Prices Rise in May

The aggregate value of Commercial Real Estate (CRE) loans priced by DebtX that collateralize CMBS increased to 88.2% as of May 31, 2012 from 88.1% as of April 30, 2012. Loan values were 81.6% as of May 31, 2011. “Commercial real estate loan prices climbed for a fifth straight month in May as underlying market conditions continued to improve,” said DebtX CEO Kingsley Greenland. “CRE loan prices in May benefited from a decline in Treasury yields.”

REIT Returns Slow in Second Quarter

Real estate investment trusts, which have become the darlings of investors over the past three years for their strong returns, are beginning to lose some of their luster, the Wall Street Journal reported. Citing data from the Dow Jones All REIT Index, which tracks 133 trusts, the sector returned just 4 percent in the second quarter, down from 10.5 percent in the first quarter and 15 percent in the fourth quarter of last year.

Blackstone Makes Foray Into Houses

Net Lease Market News Blackstone Group LP (BX), the biggest buyer of U.S. commercial real estate since prices bottomed, is jumping into residential property as housing recovers. The private-equity firm has spent more than $250 million this year buying foreclosed single-family houses with the intention of renting them out, said two people with knowledge of the effort. The goal is to acquire enough assets to potentially take public as a real estate investment trust, or sell to another company or even to tenants, said the people, who asked not to be identified because the plans are private. The venture marks Blackstone’s first major foray into the U.S. residential market. The company was the top buyer of commercial real estate in 2010 and 2011, spending about $16.7 billion, according to Real Capital Analytics Inc. in New York. Deals included the $9 billion purchase of more than 500 shopping centers from Centro Properties Group and industrial properties valued at $1 billion from Prologis. U.S. commercial-property prices have gained about 26 percent from a post-crash low in January 2010, according to an index compiled by Moody’s Investors Service and Real Capital. In the housing market, price declines are easing. The S&P/Case-Shiller index of values in 20 U.S. cities fell 1.9 percent in April from a year earlier, the slowest pace since 2010. While mortgage rates are at record lows, rental demand has climbed because many Americans can’t buy homes because of insufficient income or bad credit, or because they prefer the flexibility of renting. Monthly apartment rents in the U.S. have jumped almost 6 percent since the end of 2009, to an average $1,018 in the first quarter, according to Reis Inc.

Net Lease Market Report

Net Lease Market News The most aggressive cap rates Jonathan Hipp, CEO of Calkain, says he has seen has been in the mid 4s for “McDonald’s-type credit.” Expect compression to continue, he tells GlobeSt.com. “Given where Treasuries are headed, people are looking for yield. Also, there is so much buyer interest in this product now we have gotten to the point where we almost don’t need new buyers. What we would like to have is more products.” Not that the demand-supply imbalance will give investors pause, Hipp adds. “With everything going on, from the uncertain employment picture to the European debt crisis, at end of day people are still cautious on the economy. With the right combination of credit, location and length of lease it is a great time to be a seller in the net lease market.” Or even a buyer, he says—but with a caveat. In this environment, current buyers should beware that an eventual exit strategy could happen in a period of higher interest rates and a diminishing flight to quality. www.calkain.com

Harbor Group Sells New York Office Building for $270m

Harbor Group bought the property in January 2010 from JP Morgan Chase for $107 million. Habor Group International LLC has sold an office building at 4 New York Plaza in Lower Manhattan for $270 million to a joint venture of HSBC Alternative Investments Limited and Edge Fund Advisors. Harbor Group bought the property in January 2010 from JP Morgan Chase & Co. (NYSE: JPM) for $107 million in a 15-year sale and lease-back deal for 75% of the property. The 1.1 million square foot building is located at the corner of Water Street and Broad Street http://www.globes.co.

Net Lease Market Continued to Gain Momentum

The U.S. retail investment sales market staged a strong performance last year as property sales rose 32 percent from 2010 to nearly $61 billion. Prices for power centers and neighborhood centers increased 9.1 and 7.2 percent, to $148 and $135 per square foot, respectively. While the highly coveted single-tenant net-lease investment sector continued to gain momentum, shopping centers and other multi-tenant properties captured nearly 68 percent of total sales, for which cap rates compressed by 40 basis points. Gateway investment markets New York, Northern New Jersey, Los Angeles, Chicago, Washington, D.C., South Florida and Boston dominated this investment activity. New York City.

Net-Lease Sale in Las Vegas Hits $1,736 PSF Mark

Marcus & Millichap Real Estate Investment Services Inc. has closed a record-breaking sale on the Las Vegas Strip for a 16,016-square foot Walgreens drugstore. While the sales price of $27.8 million may not be the largest transaction by dollar amount, it breaks down to $1,736 per square foot, making this the most valuable single-tenant drugstore ever to trade in the United States.

DineEquity, Inc. Announces Solid First Quarter 2012 Results

DineEquity, Inc. DIN +9.47% , the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, reported financial results for the first quarter of 2012. "We are pleased with our first quarter performance. At DineEquity, we continue to work closely with IHOP and Applebee's on their respective brand-building strategies to innovate the menu, drive operational performance, and provide value for our guests," said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity. "Our business fundamentals remain healthy and our unique, highly franchised business model is generating strong free cash flow and enabling debt reduction, which are key measures of our success." First Quarter 2012 Financial Highlights -- Total debt was reduced by $85.9 million in the first quarter of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee's company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $69.0 million, Senior Notes by $4.5 million, and financing and capital lease obligations by $12.4 million.

Cole Real Estate Investments Crosses Milestone of $10 Billion Total Assets Under Management

Cole Real Estate Investments (Cole) announced its commercial real estate portfolio has surpassed the $10 billion mark in total assets under management, further establishing the company as a national leader in retail, office and industrial real estate investments. With nearly 350 employees across the country, Cole continues its mission to provide access to high-quality commercial real estate.

CWCapital Selling $345 Million of Distressed Real Estate Debt

Net Lease Market News CWCapital Asset Management LLC, a firm specializing in troubled commercial mortgages, is marketing $345 million of distressed debt in its biggest sale ever as investors circle souring loans. CWCapital, the second-largest servicer charged with resolving problem real estate contained in securities, is selling a portfolio linked to properties spanning the U.S. from Brooklyn, New York to Pasadena, California, according to Mission Capital Advisors, the manager of the sale. Retail buildings account for the largest share of the pool, comprising 36.3 percent, followed by office buildings at 28.2 percent, according to Mission. http://www.bloomberg.com

Westfield Sells Eight U.S. Centers for $1.15B

The Westfield Group entered an agreement to sell a majority interest in seven of its non-core U.S. retail assets to Starwood Capital Group for $1 billion. Starwood will manage and control the platform, while Westfield will retain a 10 percent interest in the properties.

BofA unloads FiDi building for $230M

Bank of America has struck an accord to sell a Lower Manhattan office building to Beacon Capital Partners and L&L Holding for about $230 million, the Wall Street Journal reported.
Bank of America took ownership if the building when it merged with Merrill Lynch, which acquired the building in 1997.

http://therealdeal.com

AIG Is Planning a Return to U.S. Property Investing

But now AIG is beginning to make plans for fresh investments across the U.S. that will begin later this year.

A real-estate division of the New York-based company has reached out to developers of new apartment buildings in major metropolitan areas, said people familiar with the matter.

"We've done multifamily deals with them before, and we're interested in working with them again," said Hal Fetner, president and chief executive of New York developer Durst Fetner Residential LLC who has been contacted by AIG about new developments.

AIG hasn't set specific targets on the size of its future investments in real estate, but people familiar with the insurer say that eventually it will amount to hundreds of millions of dollars annually.AIG started its real-estate investing business in 1987 and built it into one of the world's largest property-investment platforms with $25 billion in assets at its peak a few years ago. Its real-estate team is led by Robert Gifford, a 55-year-old industry veteran who was hired in 2009, shortly before Robert Benmosche was appointed chief executive.

http://online.wsj.com

Rite Aid 4Q Loss Narrows Amid Sales Growth

Rite Aid recently reported total drug-store sales of $7.12 billion, up 11% from a year earlier, mostly owing to an extra week of sales in the period. Same-store sales improved 3%, the drug-store chain's best showing in five years. Last week, Rite-Aid said that March same-store sales improved further, up 3.6%.

Looking to fiscal 2013, Standley said Rite Aid intends to remodel 500 stores into the wellness format and will focus on the Wellness+ program as the core component of the company's overall marketing and promotional efforts.

For the year, the company projected a per-share loss of 13 cents to 31 cents on revenue of $25.4 billion and $25.8 billion. Analysts polled by Thomson Reuters recently expected a loss of 25 cents and revenue of $25.74 billion. Rite Aid expects same-store sales growth of up to 1.5% over the just-completed fiscal year.

http://online.wsj.com/article/BT-CO-20120412-711339.html

Owner-Occupied Real Estate Is Growing in Appeal

In a market featuring rock-bottom building prices and record-low interest rates, now is an ideal time for businesses to consider purchasing instead of leasing their real estate.

That was the consensus of the panelists on the most recent episode of the "Commercial Real Estate Show," which provided a look at the factors making owner-occupied real estate a more attractive option for businesses.

Show host Michael Bull, the president and founder of Bull Realty, said the possibility of rent spikes is one reason to consider buying.

"These prices are so low, it's incredible," he said. "With the lack of new construction [in recent years], I think we're going to see some huge rents in about five years."

http://atlantarealestate.citybizlist.com/3/2012/4/9/CRE-Show-OwnerOccupied-Real-Estate-Is-Growing-in-Appeal.aspx