Real Estate Forum to Feature Net Lease Executive Roundtable
By Michelle Napoli
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New York City—The turmoil that erupted in the debt market this past summer may have stalled commercial real estate deal volume, but it will ultimately lead to better pricing and more opportunities for investors taking a long-term approach to the net lease sector. That was the prevailing sentiment among a group of industry leaders who took part in a recent roundtable hosted by Real Estate Forum and Reston, VA-based Calkain Cos. The roundtable, held here in the real estate publication's offices, will be featured in the mnagazine's October issue.
“The debt component is such a large piece of the capital structure in a transaction that pricing is going to have a ripple effect on cap rates and how the product is trading,” said roundtable participant, David M. Ledy, partner and COO of New York City-based US Realty Advisors LLC. “It will probably be 45 to 90 days before people start to get comfortable again, but conditions are not going to be like they were in April, May or June. There is going to be new pricing parameters and people will start reflecting that in their bids. It will be sellers’ turn to adapt to new pricing or not sell.”
That, the group agreed, will be a welcome reprieve for buy-and-hold net lease equity investors. “In the past couple of years, there have been so many deals getting done at cap rates that I don’t think were appropriate for the level of risk,” added another participant, Gordon J. Whiting, founder and senior portfolio manager of Angelo, Gordon & Co.’s net lease real estate group in New York City. “Now that the debt market is forcing people to pay attention to the underwriting, you’re going to see more suitably priced deals. That’s going to be better for the people who are in it for the long term versus the buy-and-flip guys.”
Paul H. McDowell, founder and CEO of CapLease Inc., and Stephen F. Olsen, president and CEO of Prescott-GNLP Capital LLC, both of New York City, also participated in the roundtable, which offered a candid discussion of trends in the net lease market. The discussion was moderated by Calkain president and COO Jonathan Hipp and Michelle Napoli, contributing editor to Real Estate Forum and editor of NET LEASE forum. Both are Real Estate Media publications.