Essential Tenants, Passive Lease Structures Top Investors’ Wish Lists

Further confirming that essential tenants, strong credit long-term passive lease structures and quality underlying real estate fundamentals are at the top of net lease investors’ wish lists, 23 net-leased properties sold last month. The properties were located in South Carolina, Florida, Georgia, Texas, Illinois, Ohio, Kansas, Oregon and Colorado.

Newmark’s Matt Berres, Samer Khalil and Karick Brown brokered the transactions.

“2021 was a robust year in the net lease sector,” said Berres. “We continued to see the flight to safety as investors were drawn to the long-term passive leases with best-in-class tenants across the country. Sellers in 2021 benefitted from historically low interest rates, a dearth of inventory and increased demand from investors from a wide range of asset classes. We expect that trend to continue into 2022.”

Notable tenants of the properties included 7-Eleven, Academy Sports, Cracker Barrel, Customs and Border Protection, Crash Champions, DaVita, Dollar General, Fresenius and Walgreens.

“2021 was also a big year for 1031 exchanges, as savvy investors capitalized on market trends with selling their downleg properties and completed an exchange to defer capital gains as they traded into more desirable properties that they plan to hold in their portfolio for many years to come,” says Khalil. “We continued to see cap rates compress significantly through the end of the year, with many properties selling above their list price.”

Each of the above transactions were executed in cooperation with local Newmark brokers: Bert Sanders (SC, FL and GA), Lispah Hogan (TX), Andy Sandquist (IL), Terry Coyne (OH), Chris Robertson (KS), David Squire (OR) and Riki Hashimoto (CO).

Berres and his team were active in 2021 with 60-plus single-tenant properties sold and another 10 already in escrow to start 2022.