Single Tenant Net Leased Investments

What Is A Single Tenant Net Leased Investment?

Net-leased properties are usually single-tenant commercial, industrial or office properties with long term leases backed by corporate credit. These leases typically obligate the tenant to provide for real estate taxes, insurance and building maintenance. Commercial properties of this type are frequently leased to national or regional retailers such as Walgreen's Drugstores, CVS Drugstores, Wal-Mart, Circuit City, Winn-Dixie food stores, Home Depot, Blockbuster, and Federal Express.

To companies considering sale-lease backs, the benefits are abundant. It is an important source of financing core competencies, making acquisition, paying down debt and redeploying capital into more productive uses. Carrying a significant amount of real estate assets simply does not make good business sense. A company can get more value from selling a building it occupies than selling an empty one when it's ready to vacate. If you can control the asset via a reasonably long-term lease, why own it?

Investors also gain from the sales lease back transaction in several ways. Sales lease backs provide stable long-term cash flow, contractual rent along with increasing operating cost being passed along to the tenant, and you don't have to deal with capital improvements. And many times upon the expiration of the lease terms, the investors own the property free and clear.

The Market for Single Tenant Properties

The 1990's started a surge of investor interest in passive commercial real estate ownership. A successful and wealthy generation of real estate investors is now searching for ways to simplify their real estate holdings by selling management intensive, multi-tenant properties, trading into less complicated real estate holdings, to avoid paying capital gains tax on their exchanges.

The single tenant, net leased property market has been one of the most desirable investments for this large pool of Buyers. Our access to this market has enabled us to be in a position to represent Buyers who understand the advantages of owning single tenant, net leased properties.

Marcus & Millichap Single Tenant Division

To address the growing needs of this new investor market, Marcus & Millichap responded by forming a Single Tenant Division. We specialize in assisting investors in valuing, underwriting and acquiring Single Tenant, Net Leased properties.