Trends & Insights

Originally published by GlobeSt Blue Owl Capital has entered into a definitive merger agreement to acquire Oak Street Real Estate Capital and its investment advisory business for $950 million. The transaction is expected to close in the fourth quarter of 2021 and is subject to customary closing conditions. Oak Street is a Chicago-based firm, founded in 2009 with over 35 employees and with $10.8 billion of assets under management as of June 30, 2021. The firm focuses on two primary strategies: structuring sale-leasebacks, which includes triple net leases, as well as providing seed and strategic capital. Market Ripe for Sale Leaseback Transactions “Right now, the market is ripe for sale leaseback transactions, and there are a couple factors pushing the popularity of this category,” Katie Elliott, Stan Johnson Company Associate Director, tells GlobeSt. “What we saw during the pandemic was a flight to safety, with investors seeking security with long-term leases and credit-worthy tenants occupying essential, mission critical assets. Many sale leasebacks fit this category, in particular industrial assets because you can’t manufacture from home, therefore increasing the ‘stickiness’ of a tenant to a location. Elliott said another trend she is seeing in the sale leaseback market is private equity sponsors utilizing real estate as a differentiator in their bids to acquire companies. In 2021, U.S. private equity dealmaking exceeded previous annual records and with the competitive environment, many sponsors are thinking outside the box. “With today’s low cap rates, there is an underlying value arbitrage between the business EBITDA multiple and effective real estate multiple, potentially resulting in millions of dollars of value creation,” Elliott said. “We are still in a low interest-rate environment, and though we are seeing the 10-year treasury begin to creep up, we still expect cap rates will remain stable throughout 2022 due to the dislocation of supply and demand and money pouring into the net lease category.” Oak Street Leadership Team Will Remain in Place Oak Street’s active net lease funds primarily focus on single tenant properties, net leased to investment grade and creditworthy tenants, under long duration leases. The Seeding and Strategic Capital business focuses on investing in early-stage real estate managers across various industry sectors. The platform provides strategic institutional capital to managers typically enhanced by attractive general partnership economics and an active governance role. The platform seeks to work with strongly aligned management teams with leading investment capabilities, oftentimes led and controlled by women and minorities. Upon closing of the transaction, key members of the Oak Street leadership team will remain in place, and Oak Street’s Chicago office will become an additional office for Blue Owl. In addition, Marc Zahr will join Blue Owl’s Board of Directors and Executive Committee.  

We are excited to announce that Scott Briggs, Senior Director & Partner, has been recognized as a Net Lease Influencer by industry news leader, GlobeSt.com. Scott was nominated by a group of his peers who value his commitment to service and relationships. Starting as an intern in 2006, Scott quickly became a rising star at Stan Johnson Company and now holds the title of Senior Director and Partner. His track record of growth and success illustrates his expertise in the net lease industry and why he’s so deserving of this influencer recognition! Net Lease Influencers 2021 Excerpt of article originally published by GlobeSt If you are a seller, the net lease space is a great industry to be in right now. Prices are rising, buyers are eager and money is circulating, ready to snap up both individual properties and portfolios. On the flip side, though, the market requires more careful steering. New entrants in the market are having difficulty sourcing transactions because it is so competitive. Did we mention that prices are rising? And while there is a huge amount of money chasing deals, those deals are finite and not necessarily fitting investors’ criteria. The experts in this space, though, are old hands at just about any scenario the market can deliver. One interesting facet of net lease is that deals get done despite where the economic cycle may be and in spite of changing fundamentals. It is the real estate industry’s de facto bread-and-butter asset class. Identifying influencers in this category, therefore, was not necessarily easy given the deep expertise that so many people have. We did it, though, selecting as we always do, those who we felt had the most impact and influence on their industry in the last year. STAN JOHNSON CO. Scott Briggs started his career at Stan Johnson Co. as an intern in 2006, working for a sole brokerage team in the firm’s Tulsa, OK, head-quarters. Since then, Briggs has demonstrated his value through his expertise, client focus and tenacity, which have helped him rise to the top at Stan Johnson Co. Throughout his time at the firm, Briggs has received numerous promotions and he also launched and expanded his team. He was promoted to his current role of senior director in 2020, before also being named partner in January 2021. Briggs currently serves as a lead broker at the firm, where he focuses on helping clients acquire and divest net lease assets. He specializes in coordinating investment sales transactions for dialysis facilities and government-leased assets. His team’s sales volume over the past three years totals more than $356 million, with 40% of that business from dialysis closings, including high-profile assets such as the single-tenant medical facility, Magan Medical Clinic in Covina, CA that traded for nearly $40 million. Briggs’ colleagues describe him as a generous teacher regarding the net lease business and someone who continuously challenges others to think outside the box. Aside from work, Briggs is active in the community through his church and as a registered foster parent along with his wife.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of 910 West Randolph Street in Chicago, Illinois. The 4,626-square-foot retail property is fully leased by fast-casual dining restaurant, Velvet Taco. Stan Johnson Company’s Isaiah Harf represented the seller, a locally based developer. The property was purchased by a 1031 exchange investor from Newport Beach, California for approximately $5.65 million reflecting a 4.16 percent cap rate.  “The asset traded before hitting the marketplace broad at a record cap rate for the tenant and area, given a stabilized, 100 percent lease in place,” said Isaiah Harf, Regional Director and Partner in Stan Johnson Company’s Chicago, Illinois office. “Due to the extremely high demand for quality net lease assets, we were able to secure a repeat buyer who wrapped their arms around the location quickly and recognized the unique opportunity to buy a management-free asset in the heart of the West Loop.” The property, located in the Fulton Market neighborhood of Chicago on Restaurant Row, was renovated in 2021. The fast growing, Plano, Texas-based chain serving gourmet tacos operates on a long-term absolute triple net lease.

Originally published by GlobeSt Easterly Government Properties, a REIT focused on commercial properties leased to the US government, has formed a joint venture with one of the preferred leading global investors. The joint venture will serve as the investment vehicle for the acquisition of an anticipated 1.2 million leased square foot portfolio of 10 properties expected to close on a rolling basis by the end of 2023, which is 100% leased to the Department of Veterans Affairs, for a purchase price of approximately $635.6 million under predominately 20-year firm term leases. Easterly’s partner will retain a 47.0% stake in the JV. Easterly will retain a 53.0% stake in the JV. Easterly will also receive asset management fees from the JV partner and be responsible for the day-to-day management of the properties. The properties are in Chattanooga, Tenn.; Lubbock, Texas; Lenexa, Kan.; San Antonio, Birmingham, Ala.; Columbus, Ohio; Phoenix; Marietta, Ga.; Corpus Christi, Texas; and Jacksonville. Expect More Cap Rate Compression in Essential Assets Brian Corriston, Director in Stan Johnson Company’s Houston office, tells GlobeSt that demand for essential assets “seems to be at an all-time high, and government-leased assets fit that profile perfectly. History has shown, besides the credit backing these leases, these assets have an extremely high rate of renewals. “With the stickiness of a tenant such as the VA, relocating becomes even less likely, and that’s an incredibly attractive characteristic to investors. “One challenge I’ve seen, however, is that non-experienced investors sometimes have difficulty acclimating to the full-service structure of the lease, where the landlord has significant responsibility compared to net lease structures. “But as capital is readily available and interest rates remain low, this sector of the market should remain attractive and strong for the foreseeable future, and I expect we’ll continue to see cap rate compression in 2022, especially compared to pre-pandemic trends.” Easterly Deal Includes Class A, Green Globe Facilities The 100% build-to-suit VA Portfolio consists entirely of state-of-the-art, Class A Green Globe Certified facilities, either recently delivered or under construction. The JV closed on the acquisition of two of the 10 properties in the VA portfolio, which are currently operating. The JV expects to close on the acquisition of the remaining eight properties on a rolling basis by the end of 2023, in connection with construction completion and lease commencement dates. Once delivered, these facilities will be the newest VA medical care centers in six of the 18 Veterans Integrated Services Networks (VISNs), which six VISNs offer critical healthcare services for approximately 7.2 million veterans, or approximately one third of the entire U.S. veteran population. Each new facility will enable the VA to expand its current services in each local market by either replacing smaller existing clinics or supplementing existing facilities with more robust capabilities in a complementary location.  

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of a retail bank branch located at 10600 Harrison Avenue in Harrison, Ohio. The 6,400-square-foot property is triple net leased to KeyBank. Patrick Metz of Stan Johnson Company represented the local private seller. A 1031 exchange buyer from Omaha, Nebraska purchased the property for approximately $2.1 million, reflecting a 6.55 percent cap rate. “This is the second of two KeyBank locations that we sold for the owner in the last few months,” said Metz, Associate in Stan Johnson Company’s Cincinnati, Ohio office. “For both locations, KeyBank has been the tenant since 1980 and had recently renewed their lease ahead of schedule, illustrating their commitment. Both locations continue to be top of the market performers for KeyBank.” With convenient access to Interstate 74, the property is located at a signalized corner in a dense retail corridor less than 30 minutes northwest of downtown Cincinnati. Area tenants include Kroger, Home Depot, CVS Pharmacy and AutoZone, among many others. “Compared to the previous sale, the Harrison, Ohio location was a higher price point asset situated on a larger 2.0-acre lot,” Metz added. “In addition to KeyBank’s highlights, we were able to tell a great story of the value of owning a large corner lot with traffic light access in one of southwest Ohio’s fastest growing markets.”

We are excited to announce that Stan Johnson Company has been recognized as an Industrial Influencer by industry news leader, GlobeSt.com. We are passionately committed to serving clients in this dynamic sector and are honored to be included in this year’s list of influencers. Industrial Influencers 2021 Excerpt of article originally published by GlobeSt It would be easy to say that now is a great time to be in the industrial real estate asset space. Demand, pricing, rents—they all favor the industry right now. As one example of the sector’s great fundamentals: rents are projected to increase as much as 10% or more this year, per Prologis. But experts in this category do have some juggling to do. Tenants are eager for space and it is not easy to satisfy them all. Developable land for industrial use is relatively scarce and the prices for sale lease-backs are rising as developers are seeking out any property available for their purposes. Navigating this environment takes skill. With these challenges in mind, we have selected our annual group of industrial influencers. We choose, as we always do, based on accomplishments and impacts the influencers have made on the industry. As you read through these stories, we believe you will agree with our decisions, hard as they were to make. STAN JOHNSON CO. For the last 35 years, brokerage firm Stan Johnson Co. has been a leader in the triple-net lease segment of the market, and industrial properties are one of the firm’s strongest asset classes. Founded by president, CEO and namesake Stan Johnson, the firm has completed more than 850 industrial transactions and more than $10 billion in industrial sales volume, but much of that has come within just the last three years as the industrial market boomed. Already this year, Stan Johnson Co. has brokered the sales of an eight-property industrial portfolio for $28 million, a food processing facility in Sacramento for $20.8 million and a distribution facility in Ohio for $11 million, which sold above the list price. The firm brings both a local and a national perspective to deals, while specializing in single-asset and portfolio sales, sale-leaseback transactions and 1031 exchanges for all types of industrial properties, from warehouse and distribution to cold storage and manufacturing. Outside of the office, Stan Johnson Co. is engaged in the community through its philanthropic foundation SJCares, which works with local food banks throughout the country.  

Excerpt of article originally published by GlobeSt Transportation is critical in and around hub cities such as Atlanta and the Southeast continues to gain favor from investors. This week Aries Capital, a Chicago-based real estate investment firm, launched its industrial net lease private equity platform with the acquisition of Lyft’s Atlanta Driver Service Center. The property is strategically located in one of the largest intermodal hubs in the Southeast, with frontage to Interstate 75, and within four miles of Hartsfield Jackson Atlanta International Airport (the world’s busiest airport in 2021). Aries Capital Private Equity acquired the newly renovated asset for approximately $6.5 million from Icarus Alternatives, an Atlanta-based development firm. Aries’ strategy was launched in Q2 2021 to invest in a diversified portfolio of operationally critical industrial and logistics assets throughout the Southeast. The platform targets triple-net and sale-leaseback opportunities in the lower middle-market with long-term corporate tenants, with a focus on transaction values between $5 million and $25 million. The acquisition of Lyft’s Atlanta Driver Service Center marks the platform’s inaugural transaction in one of Aries’ core target markets. The newly renovated light-industrial facility is 100% net-leased to Lyft and serves as its sole Atlanta Driver Service Center. The Lyft Driver Service Program offers drivers heavily discounted vehicle maintenance and repair services and free diagnostics, as well as serves as a local and central co-working hub for drivers. As of July 2021, Lyft has opened nine such facilities across the country and is committed to no more than one in each major market, supporting the mission-critical nature of this asset. Logistics and Last-Mile CRE in Deman Colin Couch, Stan Johnson Company Associate Director in Atlanta, tells GlobeSt that the Southeast has been one of the more active regions for industrial investment and development in recent years. “It’s no surprise to see a new portfolio focused on product acquisition in this area,” Couch said. “The region continues to see robust population growth with Atlanta as the primary hub for the Southeast, but the region also has a number of attractive, growing secondary and tertiary markets across Florida, Tennessee and the Carolinas, among others.” Seaport and airport markets, such as Savannah and Memphis, remain important amenities for the region as well, Couch said. “Mission-critical facilities, especially those related to logistics and last-mile, are in very high demand with buyers, so the market can expect to see high levels of competition for these assets during fourth quarter and into 2022,” he said.

Stan Johnson Company, one of commercial real estate’s leading investment sales brokerage firms, has completed the sale of Suwanee Celebration Village located at 2780 West Village Drive in Suwanee, Georgia. The 14,388-square-foot shopping center is fully leased to seven tenants including Verizon and ATI Physical Therapy. Stan Johnson Company’s Jeff Enck, Brian Lane and Emery Shane represented the seller, a locally based group of private investors. An individual investor based in McDonough, Georgia acquired the property for more than $5.1 million at an undisclosed cap rate. “The seller felt there was a short window in the market to maximize their return and wanted to do something fast,” said Lane, Associate Director in Stan Johnson Company’s Alpharetta, Georgia office. The property was constructed in 2019 and more than half of the property’s tenants operate on 10-year leases, making the asset attractive to a wide buyer pool. “We procured 12 offers in the first two weeks of marketing and were fortunate to have our choice of buyers,” added Enck, Associate Director in Stan Johnson Company’s Atlanta, Georgia office. “The property closed in 30 days with an all-cash investor.”