09-28-2005, 08:50 AM
| | Shorter Term Net Leases
There is a discernible trend among less risk-averse institutional investors
to acquire shorter term, investment grade net leases.
The minimum basic lease term is generally at seven years (sometimes to five
years, but then only if the investor has a greater specific industry knowledge).
The geographic footprint is often nationwide, but on occasion bears a
particular geographic focus through a group's willingness to live with a greater
--if done on the regional real estate "home turf".
The general motivations seem to be to capture a higher yield commensurate
with the relatively short lease term, as adjusted for the company
creditworthiness; or to speculate on any below market rents under the lease; or---once
again depending on the particular age of the lease---to look to a self-amortizing
debt over the remainder of the lease, and the attendant later refinancing
Additional underwriting considerations :
* Preferred product types are industrial, retail, convenience stores or fast
* Sized at a $5 million minimum.
* Company on lease has a minimum $25 million of net worth.
* Minimum company credits at BBB.
We are not the principals, but are acting to facilitate ventures.
If you have an access to these properties, please call Mr. Margolin of
Chilmark Associates Inc. at 203-353-0897.
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