Investors should evaluate today’s valuation risk compared with other investment vehicles and carefully consider exit strategies. Long-term fee interest ownership typically will help minimize additional exposure while achieving appropriate returns. Today’s valuations are usually driven by leveraged cash-on-cash returns and residual value.
Single-Tenant Net Leased Properties
In today’s current economic climate, investors of single-tenant net leased properties have shifted their investment philosophy to reflect adjusted risk/return ratios with an emphasis on capital preservation. This investment mindset provides protection against the short term market fluctuations while providing consistent and predictable returns for the owner over a longer period of investment.
At Paramount Partners we analyze each asset and develop a marketing program that reflects current market conditions including capitalization rates, both the asking and trading rates, tenant creditworthiness, real estate quality, debt/equity components and lease structure.
Our goal is to create the highest transaction value with a degree of certainty utilizing electronic delivery programs, thereby creating speed-to-market, broad exposure, and pricing efficiency. This process initiates the following:
- Maximize value/price
- Certainty in value/timing
- Effective structuring
- Position asset by sector and market insight
- Underwriting/market expertise
- Capital knowledge
- Exposure to pricing inefficiencies
We maintain a detailed report of the investment sales process allowing our clients to make informed and timely decisions relating to the marketing process, qualifying buyers, negotiating the highest and best terms, due diligence issues and all related matters to effect a successful transaction.
The 1031 Exchange
By constantly monitoring the 1031 exchange market, we strive to position our clients to acquire the right replacement properties without sacrificing tenant quality and the value of the underlying real estate.
There are many challenges during the 1031 exchange process. By working directly with the investor, developer and brokerage community, we have the relationships and expertise to council our clients throughout the 1031 exchange process.
One of the most common problems is identifying a replacement property within the forty-five day identification period. Some factors to consider include supply constraints of qualified replacement properties, debt/equity components and competing 1031 exchange buyers. It’s not uncommon for 1031 exchange buyers to find increased pressure on cap rates and are forced to pay a premium between 50-150 basis points to secure the necessary property to defer capital gain taxes. Paramount will use all of its resources to find the best replacement properties in the shortest amount of time.