In the corporate real estate sector, single tenant net lease sales are one of the chief niches. The alternative names for single tenant net lease properties are retail or industrial building, or free standing office. The tenant gets into a commitment for at least 10 years or more, with the window for an increase in rent during the lease period. The tenant will have to pay all operating expenses, along with the rent. These operating expenses include: utilities, repairs, insurance premiums, and taxes.
Unlike regular real estates, the value of a single tenant net lease property, in addition to the physical value of the property itself, depends on the length of the lease, rental escalations, and tenant’s credit. Besides, the location and fundamentals of the physical building are some other factors. Single tenant net lease properties are a passive equity investment, which results in significant tax savings.
And, recapitalization, portfolio dispositions, and advisory services are core components of the Corporate Capital Markets array of services.
Benefits of Single Tenant Net Lease Properties
- Due to the underlying credit tenancy, bond-like feature, and long-term lease opportunity, single tenant net lease properties value do not fluctuate even in a volatile market.
- It ensures a passive income stream; and that is also with hardly any owner responsibilities.
- In a long-term lease, corporations take over the real estate asset and pass the debt burden to the investor.
How does financing work for single-tenant properties?
If the tenants have a good credit record along with stability, getting financing should not be hard. Nevertheless investors should consider placing a down payment of minimum 30%.
Who can invest in single tenant net leased properties?
Today, most of the investors are eyeing single tenant net lease properties as a viable option. The ideal investors could be some wealthy businessmen or individuals looking forward to reap the benefits of 1031 tax-deferred exchanges.
