Sale-Leasebacks, also known as Net Leased properties, continue to be a very popular real estate investment for high net worth individuals and real estate investment partnerships. There are several reasons why and here are the top five:
1. Long term leases
2. Credit tenants
3. A+ locations
4. Little or no management required
5. Fee simple ownership For those investors that are looking to balance, reposition and diversify an investment portfolio, many are rediscovering fee simple ownership of investment real estate.
Too often the only portfolio exposure to investment properties has been through the purchase of a stock in a REIT or some type of blind pool that would invest in properties, conservative or value added, retail, office or industrial. Unfortunately, the value of the holdings were subject to the vagaries of the stock market and we all know where that has gone. So, regardless of the underlying asset value the stock value of their holdings have declined.
That’s why more and more investors are returning to fee simple ownership of real estate. What has always been one of the major concerns of the investor – the time and effort needed to manage a property – need not be a concern when purchasing a sale-leaseback, net leased property. These investments typically have fresh long term lease (10 to 25 years) in place, are newly constructed buildings in quality locations and have a tenant that is a truly credit tenant leasing the property on a triple net or double net basis. Net means the income in net to the investor. The tenant is paying all if not most of the expenses of occupancy therefore there is little if any management required. For the busy professional that has not the time or inclination for management a sale-leaseback is the right answer at the right time.
There are numerous commercial investment properties new to the market and offered for the first time every month. The serious investor needs to be aligned with a commercial real estate broker who understands investment real estate and can identify various opportunities in diverse markets. For the conservative investor, net lease real estate can offer solid long term returns on capital.