It looks like another record year for the triple net leasing market, the demand far exceeds supply in most parts of the country. Thank you also continue to be high in particular to the population of baby boomers looking for new types of retirement investment demand, and demand, especially from people who are in the middle of 1031, the deferred tax exchange. And in light of the interest rates on the rise, cap rates tend to remain low prices stable. Shopping Center Business recently spoke with several companies that are active in the market triple net about these developments and what we know to expect for 2006.

Demographic change The main reason for the current market triple net change is the most important demographic of baby boomers moving into retirement. According to Bruce McDonald, president of Net Lease Advisors, there are 75 million baby boomers, the oldest of which are just true, at the age of 60, there are so many older Americans who have built a considerable fortune in real estate portfolio. Their ability to provide rental market power allows them to pay capital gains and move to avoid the property management intensive real estate passive provides a stable income. “There are many people who have built their portfolio of single-family, duplex or triplex, and they are too old to worry about now a yin to investment management, which produces free cash flow,” says Ralph Bunje, President of Reverse Exchange Services, Inc. “The traditional triple net for these investors a single tenant property, like a Burger King or mail, because it meets their criteria. Now, as a result of this demographic shift, there was the creation of the [tenants in common ] ICT industry.
Besides a free asset management, many of these retirees for “safe” investment, look at the approach of the traditional exchanges contrast.
Ago many people who have already invested in the stock market or other investment opportunities could be, and feel more comfortable in the market triple net, “said Leith Swanson, president of Premier Realty Net Advisors, Inc.” A Many investors rich? individuals and entities â? who were on the market and at the same time, it a lack of quality investment-grade properties Net rental pool to buy for investors. So what you have done with the last two years is a huge pool of investors who invest because of the requirements of 1031 or simply because they market and are a dozen fixed years. “
While most agree that the Triple Net Investment is growing in popularity, a person we believe that the stock market always talked some appeal. “I think the media have managed to help is the perception of the housing bubble,” said Keith Sturm, director of Highland Real Estate Group. “I do not think there is a bubble, but it certainly gives our customers a little more hesitant based on properties only to what they hear on TV. In this sense, I is that the equity market notice sexy again. People have very short memories and have forgotten how their 401Ks were melted at 101K in the last award of â? crash converted. These memories, and people think again skipping

triple net investment, but cap rates have not necessarily follow, according to several people we speak and the price remains stable. “Demand remains strong because people simply looking for properties and non-management seems to fit net lease,” Jay Bastian, senior vice president of acquisitions, said Commerce Net Lease Realty.
“When resources where they are or downward trend, I think cap rates will probably be at their current levels but remain, of course, is a pilot cash cap rates in some ways. Everybody talks about rising interest rates, but I don ‘ t see weak demand, because it,.. “says James Dwoskin, President of ICA Realty” It is simply the pricing of deals, “
” It’s still a seller’s market seller incredible stick to more closely the prices, which was originally introduced to an environment of low interest rates, but it seems not every movement in the cap rate on credit card offers higher. The offers of lower credit, it is flexible and always play in the pricing. “
According to William H. Winn, President of PASSCO Companies, LLC, the supply is limited and there is more demand from buyers. “However, he said,” the movement of interest rates the market has changed a little. Higher interest rates and continue the pressure on yields, and this trend continues, demand will be lower on the side of the buyer. “
Winn continues,” If the seller does not reduce the cost expectations, the result is less volume of transactions as buyers and sellers unable to agree in a position to the purchase price. “
McDonald said he does not have a change in the pricing seen.
” Everyone thinks that follow the capitalization rate, interest, “he said.” If interest rates continue to rise, it can be to a change in prices at a certain point, but so far it’s too early. It is usually a late anyway, but I think in this market, there is probably a longer period between interest rates and capitalization rates.
Jonathan Hipp, President of the Calkain company, takes a similar position.
“There are a lot of activity with buyers for tax reasons, and plenty of fresh capital, which is not related to exchange,” says Hipp. “Although interest rates have risen, cap rates are therefore not seem to move on interest rates, that report fairly aggressive capitalization rate of that debt. “
a storm, low prices, according to keep their high-quality goods and capitalization rate in the category of non-investment-grade properties are in the range of 0.5 million there really to increase pressure on the capitalization. “The trend I can see now that there is a huge demand for discount rates, based on interest rate increases, causing a bit of a downturn in the market to the discount rate to adjust interest rates”
, said Sturm.

2006 Market So what is the effect of demographic change and rising interest rates have long term?
The risk is great that people in a market with big buy after Bunje, but how long it is the burning question.
“Demographic change may also push for this type of investment for the next 10 years, at least,” he said. “But the question is, these investments will be popular and the demand is there when the real estate market should fall apart? If decrease home values, the focus on long-term interest rates. As you look only at a rate of 10-year Treasury, is telling you what happened in this market. “
There facilitate various forces that cause cap rates in 2006, said Barry Silver, senior partner of Silver Willis Investment Real Estate.
“For the first time in my experience, investors are not willing to accept such small returns, and she turned to the ICT market,” he said. “And they sold a higher return date without a huge amount of thought to the consequences of what will happen if the debt, the interest that they pay to see in 5 or 10 years.”
Swanson said Cap Rates for properties net lease will be higher in 2006.
“We can not look to see that in the fourth quarter as good as the results for the third quarter will be. But cap rates have lagged behind in the past interest rate changes, and if Cap Council have continued to drift lower in September, October and November, the interest rates relatively stable in the whole. But there are some inflationary pressures, and we will see an increase in the capitalization rates are at the end of next year. “
” The average interest rate on a long-term triple-net is the property 8 to 10 percent, “says Bunje.” Many of them sell for 5 to 6 percent today hui, and this is mainly due to low interest rates. If interest rates rise, cap rates, then, and that increasing the CAP prices , investors lose their money invested, because the cap will Council have to change.
While the competition is tough, it can be a difficult market in 2006, according to Paul Domb, asset manager for the Trust Fund.
“As interest rates rise,” primary player? The REIT and the general CNLS â? Continue to do business, and I think a lot of Johnny come-lately is not able to compete and find a very difficult market .

Hot Property What, where and how investments are made in 1031. With the success of triple-net leases and 1031 exchanges, the types of investments on the importance of our day? Shopping Center Business recently spoke with James Dwoskin, President of ICA Realty, Paul Domb, asset manager for the Trust Fund, Ben Simon, in partnership with the company, Simon Leith Swanson, president of Prime Net Realty Advisors, Inc., Bruce McDonald, president of net- Lease Advisors, Jonathan Hipp, President ofSusan H. Fishman, Keith Sturm, Director of Real Estate Highland Group, Inc., Michael Shephardson, Executive Vice President of Property and Trustreet Dan McCabe, president of the Investment Exchange for more information about the types of . real estate and investments, which are on top of the list for today’s investor
SCB What types of properties are hot now, the 1031
Domb: In our view, is a kind of property that is not better than the ? others and we do all office, retail, industrial branches, lenders pawnbroker, 7-11s, you name it all to a single tenant
Simon: On the sales side, that the Eckerd and. . CVS, which develop from the ground when you can get with a manufacturer who makes them, then you might be able to be your arms around a new product will
McDonald. All properties are sought for 1031 I think what separates them. is usually the size of the purchaser 1031 in terms of how much money they have to reinvest in order. On a typical bell curve, there are only 1031 people who have smaller dollar? million dollars to invest? . They have a lot of small retail shops such as pharmacies and fast food restaurants. If you come in a wider perspective, the retail sector, most transactions, but it works is not so high because of Industrial and Office tend to larger transactions
Hipp be. It used to be mostly retail, but now there is a lot more office and industrial buildings, but I say still, because retail is producing the best products out there â as Advance Auto 7000 square feet, or 3,000.? square Laden video. The most desirable real estate is a pure triple net property with reasonable or good credit. behind it and rent increases, more than ever I see the buyers who are on something other than what they had hoped she and the yield was lower than they had expected
storm must buy. The single-tenant net-lease, good credit, well located properties are really what most sales today. We do a lot of detail, and that is what we call management features minimal . The best-seller that we see today are passive real estate investments, where the owner only gets a check on a daily basis
McCabe .. There are a variety of desired properties for 1031 I’ve seen it all, large complexes industrialists who are down and the mall typical semi-regional interests in oil and gas and building multi-tenant office. It is almost can find on the sender. I see a large number of multi .- tenant office buildings, medical facilities are there to many dollars chase too few deals inexperienced
CBS. How hard is it to find properties
Dwoskin: The best qualities are very difficult to find there are many smaller credit, special buildings, things like. net-restaurant building leased by franchisees? those who are always available. It is harder to find leased properties that are important assets, such as warehouse distribution, office and retail space are to be leased to credit tenant investment grade. In recent years, determined the top-most credit users big box Wal-Mart, Target, Costco, Home Depot and Lowe’s, they no longer want to become a tenant, if they can avoid it and you all want to own their properties. So these offers evaporated, there are very few, if any, on the market, what remains of the slave-investment-grade credit is sought after, and people will pay more to
Hipp.. properties are not difficult to find it difficult to be found something useful, it is still a market where if you like something, you have to go after you see
Shephardson.. We are very niche-oriented and work in two main areas â 90? percent of our business is in the restaurant arena and the other 10 percent only general retail, pharmacies, banks and convenience and service outlets include. We found that, because we know in the business for so long and so many restaurant operators, and because we have a very strong business acquisition efforts in our creation, we have not found a product challenge
CBS. Where are the people looking for property
Domb: For investors, 1031 is the private property is an important factor in the local properties of the key credit and type of property are secondary or tertiary considerations, the investor in 1031 very difficult to find quality investments
Swanson… We deal with customers generally in the range of millions of dollars and higher, and in the region do not cause appears, of course, do not buy a lot of properties in Louisiana and Mississippi. The catalytic engine of growth in net rental market is that investors can move across national borders and not for their own backyard are banned
McDonald. The product is spread throughout the country, there are certain areas for different types of products in Florida and the South East growth areas are large and the Western states office and industrial.. ? deals headquarters building are in progress to one hand, they tend to be in distribution centers like Memphis or New Jersey
CBS. The structures of ICT continues to grow
Swanson: ICT structures provide the individual investor, no million dollars to the opportunity to participate, so it is really the growth of the market we see driven leap
McDonald:.. You are certainly on the rise in 2001, they have about 0 million in stock and in this year, they expect to make one U.S. dollars equity? and only the portion of the securities. It is obviously a very strong demand, and the links in the fact that the majority of their buyers less 1031 and the shares of ICT they can be a bit like . have a passive investment, it is clearly a product that there is a significant demand for
Hipp.. you are always a very popular vehicle and thousands more publicity and well known are many people out there with 0000-0000 and it is difficult to buy something without much leverage you much rather buy into a partnership with a group of other assets to more quality and to work it to someone else worry about managing
Hipp:.. The ICT market is definitely more popular, and I think they have a purpose. But when people start buying homes with interest-free loans for their personal cash flow, I think it’s a double edged sword, because if the loan in 5 years they will be mature in the market to find fault in another interest rate environment, I’m not sure they know exactly what to buy
storm:.. We believe that the ICT infrastructure is really the future for passive real estate investments . The generation of baby boomers as a demographic group, just 59 and a half, and it is not long before their 401k plans will be available to them to begin to draw some money on a tax deferred. But what we see, is that the properties, the quality of ICT investment grade are in a position to attract financing at very favorable moment. We have to get in a position to finance long-term in the range of 5 to 6 percent fixed, while the 1031 or net lease properties in which we speak funded in the range of 6 to 7 percent
Shephardson. ICT applications in the 1031 big, beautiful arena, where you sell an asset pool or you sell an asset at the big million dollars and it will be distributed to many buyers. So the only thing that is now in the ICT market is due to decide whether a potential real estate product or a product of the securities. We hope that we do ICT in the not too distant future because it expands the universe of the buyer.

Susan H. Fishman
short term office rent