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The Public Market:
This market includes REITs, Sale-Leaseback firms and finance companies.
These groups typically invest larger amounts of capital and, as a result, are
seeking higher rates of return. The yield that they require is linked to the
interest rate market and to the availability of discretionary funds available
for investment.
The Private Market
The private investor market continues to be the most aggressive
buyer of Single Tenant properties. A majority of these investors are trading
out management intensive real estate investments and moving into a single tenant
property. The IRS has created a vehicle called a 1031 tax deferred exchange,
which allows the investor to reinvest sales proceeds into a new property without
paying taxes on the sale. Deferring capital gains taxes can be an enormous savings
and, as a result, the investor derives an enhanced benefit from the purchase
of the new property.
Avoiding capital gains issues and the desirability of purchasing
a long term passive investment adds to the popularity of Single Tenant properties.
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