Craig Macnab, chairman and CEO of National Retail Properties (NYSE: NNN), joined REIT.com for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.
When asked about factors behind the high level of interest in the net lease sector right now, Macnab referred to his company’s own returns of 12 percent to 14 percent annually in the last 20-year period, which he said were reflective of the sector. “I think the net lease business is really a good business, and it’s consistent, predictable, and it just grows,” Macnab said. He noted that National Retail’s strong returns have come without engaging in major transactions.
“We don’t think we build shareholder value just by doing deals, and some of these deals were done at very elevated prices. I guess it validates the sector. That’s probably the only way to look at it,” Macnab said.
Turning to National Retail’s recent portfolio repositioning, Macnab stressed that “at the end of the day, we are constantly trying to improve our portfolio.” In the third quarter, Macnab said, the company sold properties that it thought would fit better in other hands.
“We’re doing this constantly at the margin, just working a little bit on some of the weaker properties while trying to acquire stronger properties that will provide us with a nice return over a long period of time,” Macnab noted.
Looking ahead to challenges and opportunities in 2014, Macnab responded that the overall business environment is not getting any easier.
“There’s a lot of demand for real estate. Cap rates are very low,” he said. However, he predicted that REITs, in general, will still continue to outperform.
“The biggest opportunity for all of us here is to continue doing more of the same. REITs provide very consistent total return, and I am really optimistic that over the next five years, all of us are going to provide that type of return to investors,” Macnab said.