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Net Lease Bank Investors Turn Selective

Increasing cap rates and limited supply are leading net lease investors to carefully review acquisition opportunities, observes The Boulder Group President Randy Blankstein.

Cap rates for the single-tenant bank ground-lease sector increased by 21 basis points (bps) to 4.84 percent in the first quarter of 2018, compared to one year ago. At the same time, the supply of bank ground leases on the market decreased by 18 percent. While bank ground-lease cap rates were on the rise this past year, the cap rates for the overall net lease retail sector compressed by 9 bps. Accordingly, the significant cap rate premium historically associated with the bank ground-lease sector compressed to 136 bps from 156 bps. For the purpose of this report, the bank ground-lease sector comprises both national and regional banks, regardless of credit.

Commercial Property Executive

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Net Lease Bank Investors Turn Selective