Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/753030
86 S C T / D E C E M B E R 2 0 1 6 a passive ownership structure," said Jason Powell, a director in the Atlanta office of Tulsa, Okla.–based Stan Johnson Co. "With a net-lease property, you can have zero landlord responsibility, depending on the way the lease is structured. You also eliminate certain exposures you would have with shopping centers, such as operating expenses, capital expenses, lease risk, vacancy [or] credit risk and management responsibilities." Conversely, the upside is greater with owning a shopping center, sources say. "In today's market, most single-tenant net- lease returns are in the mid-to-high-5-percent range for prop- erties leased by investment-grade-credit tenants with 10-plus years of remaining lease term," said Powell. "Returns on a gro- cery-anchored shopping center can be in the 5 to 7 percent range, while unanchored shopping centers with a mixture of national, regional and local credit can be in the 7 to 9 percent range." In addition, net-operating-income appreciation on mul- titenant properties can also help boost returns on a shopping center investment, observers say, because one typically sees more rent escalations in the shop tenant leases, with oppor- tunities to renegotiate and reposition the rent roll coming up as leases expire. "There are fewer buyers of quality larger assets in second- ary and tertiary markets," said Mark Bratt, senior managing director and head of U.S. retail investment sales at CBRE. Bratt says he is seeing a lot opportunity for private investors now. >> "With a net-lease property, you can have zero landlord responsibility. You also eliminate certain exposures, such as operating expenses, capital expenses, lease risk, vacancy, and credit risk and management responsibilities." S E L E C T E D S I N G L E - T E N A N T S A L E S C O M P A R A B L E S SALE DATE SECTOR TENANT CITY STATE PRICE PRICE PSF CAP RATE LEASE TERM REMAINING August Industrial Home Depot Tolleson Ariz. $48 million $103 5.25% 14 August Industrial Golden State Foods Brookfield Ill. $39 million $267 6.60% 16 September Industrial Famous Footwear Lebanon Tenn. $33 million $60 6.71% 15 September Office Citrix Systems Fort Lauderdale Fla. $24 million $200 8.30% 10 September Retail BJ's Wholesale Club Maple Shade N.J. $16 million $142 7.13% 5 August Office US Bank Milwaukee Wis. $14 million $126 6.13% 10 July Retail CVS Miami Fla. $13 million $1,383 4.82% 25 July Retail LA Fitness Glendale Ariz. $13 million $271 6.21% 14 July Retail Walmart Neighborhood Market Richmond Va. $12 million $294 5.40% 15 July Retail Academy Sports Diberville Miss. $11 million $181 6.39% 15 August Retail Fresh Thyme Farmers Market Worthington Ohio $11 million $377 6.91% 14 August Retail CVS Phoenix Ariz. $10 million $844 5.65% 19 September Retail Wawa Marlton N.J. $7 million ----- 4.46% 19 August Retail Walgreens Raleigh N.C. $7 million $505 5.40% 20 August Retail Walgreens Ruston La. $7 million $446 6.13% 16 August Retail Natural Grocers Aurora Calif. $6 million $429 6.20% 15 July Retail Walgreens Columbia S.C. $6 million $381 7.40% 6 SOURCE: THE BOULDER GROUP