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Should Net Lease Investors Worry About Convenience Store Tenants?

Should Net Lease Investors Worry About Convenience Store Tenants?

Cap rates for properties occupied by high-quality tenants, such as 7-Eleven, have achieved cap rates between high 4 percent and low 5 percent in the fourth quarter of 2017.

In 2018, net lease investors can expect middling performance from convenience stores. Recent estimates suggest that convenience stores will achieve total sales of about $73 billion in 2018—on the lower end of the spectrum for this sub-sector—and total sales growth of just 5.5 percent, according to the “Retail, Apparel and Restaurants—U.S., 2018 Outlook,” from Moody’s Investors Service.

Convenience stores are staple assets in the portfolios of net lease and 1031-exchange investors. Cap rates for properties occupied by high-quality tenants, such as 7-Eleven, have achieved cap rates between high 4 percent and low 5 percent in the fourth quarter of 2017. According to data from The Boulder Group, a net lease commercial real estate services firm, retail net lease assets overall reached the average asking cap rate of 6.07 percent during the quarter.

National Real Estate Investor

More info at National Real Estate Investor:
Should Net Lease Investors Worry About Convenience Store Tenants?