11/14/2013 | By Sarah Borchersen-Keto
A panel of net lease REIT chief executive officers told a REITWorld 2013 forum that the sector is likely to continue on a path of solid growth, fueled in part by an inflow of assets from the non-traded segment of the market.
Net lease REITs own properties, typically free-standing buildings, that they lease to single tenants. The leases require tenants to pay all the costs of operating the properties, in addition to the rent.
Nicholas Schorsch, CEO of American Realty Capital Properties, Inc. (NASDAQ: ARCP), predicted that the net lease sector could grow to be a $100 to $120 billion sector.
"I don't think we'll ever go back to $10 billion," he said. "Money is moving."
W.P. Carey Inc. President & CEO (NYSE: WPC) Trevor Bond added that although he does see some "headwinds," such as lower multiples for net lease companies, in the long run, he's "very optimistic."
Craig Macnab, chairman and CEO of National Retail Properties, Inc. (NYSE: NNN), said his company doesn't need size to diversify its portfolio at present.
"Our day job is to build value for shareholders," he said. "At the end of the day, net lease is just a document that defines your relationship with the tenant."
Amy Tait, chairman, president and CEO of Broadstone Net Lease, Inc., a privately held REIT, said she expects her company to "far outperform fixed income, which is where most of our capital is coming from." Tait also pointed out that Broadstone is taking advantage of new Securities and Exchange Commission rules allowing small companies to promote themselves to investors. Before this relaxation of the rules occurred, she noted, fundraising was limited to friends, family and the country club. "The industry is changing," she said.