Christopher Volk, president and CEO of STORE Capital Corp. (NYSE: STOR), participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.
When asked about 2018 acquisitions and pricing, Volk said the company has been on a pace to do roughly $100 million of acquisitions a month for the last three years, noting that the capitalization rates “have held pretty steady for most of that time.”
Since the market is so broad, most of the competition for those assets tends to come from non-public, non-institutional players. “The competition’s been static,” Volk said. “[We always try] to create demand and not just steal market share from other people. We have a lot of relationship managers that are making constant calls on companies around the country to be able to do that.”
Rental rates, meanwhile, have been holding steady, and STORE Capital makes it a rule to buy assets for their replacement cost or less. “If you were to equate our rent per square foot today versus our rent per square foot for the last three years, we’ve been seeing it’s been pretty steady,” he noted.
STORE Capital’s dominant category tends to be service-based industries, like childhood education, fitness clubs, and veterinary clinics, Volk said, although the breakdown of its top tenants by category could certainly change.
“The top 10 will be dominated by service with some retail base to put into it, and within that top 10, there will be some fluctuation,” Volk said. “We’ve seen some of that this year. We’ve had three or four new companies [come] into our top 10, as other companies have dropped down.”