Net Leased Investments 2005 Outlook

Globest.com reports on the 2005 outlook for net leased investment properties.

"The net-lease market for 2005 looks good, but there are some red flags to watch for. That was the consensus at Capital Lease Funding Inc.’s 10th Annual Correspondent Briefing, held this morning at the Mortgage Bankers Association’s Commercial Real Estate Finance/Multifamily Housing Convention and Expo here.

The real estate market will subsequently mimic the economic recovery. While fundamentals will continue to be relatively weak, Pollert said improvement will be confined to specific segments. Capital flows will continue to be strong due to a lack of attractive alternatives and a strong CMBS market of about $85 billion to $90 billion.

For the net-lease market, Pollert expects demand to continue to be strong, with supply growing by $25 to $27 billion due to the perceived peaking of values. While cap rates tightened another 50 to 60 basis points in 2004, with investment-grade properties trading at 5% to 5.8% and non-investment-grade caps in the 7% to 8.5% range, he anticipates cap rates to creep up in 2005. Tenant-in-common investors will also be tested this year, he noted, due to SEC rulings, high fees, unsophisticated investors and the realities of operating TICs. Pollert said they haven’t been around long enough to have a set plan in case something goes wrong."

GlobeSt.com DISPATCH: CapLease Is Positive on Net-Lease Real Estate for 2005By Sule Aygoren Carranza Last updated: February 7, 2005 12:48pm