Los Angeles, California – The Net Lease Properties news for the afternoon is on a REIT (real estate investment trust) and net lease investments. The information we have is on a transaction involving Dillard’s and Net Lease Properties. Dillard’s has made mention in a regulatory filing last week that they believe the formation of a REIT (real estate investment trust) may enhance their ability to raise capital and thus improve the liquidity of their Company. Dillard’s plans to do a sale-leaseback with specific commercial properties that they currently control. Dillard’s would transfer some properties to the REIT (real estate investment trust) and will then lease back with exceptional triple net lease terms on the properties. Dillard’s Inc. has had some success in sales given the current economic downturn.
Net Lease Properties site notes that given the current economic situation, retail stores have struggled to stay afloat. As we have mentioned in past articles, many retail department store companies have their main assets sitting as commercial real estate holdings. With the exception of possibly Nordstrom retail company, many retail department stores are still in need of capital. Commercial Real estate sale-leaseback transactions can be profitable and they can generate capital for immediate use for the business that was sitting on commercial property. The sale-leaseback unlocks the equity that is built up in your commercial real estate investments. Some financial analysts wonder if Dillard’s is possibly trying to take advantage of the favorable market conditions that currently exist for (real estate investment trust) REIT’s. Also Net Lease Properties site has read that many Economists have stated predictions which are all over the place but NNN Lease Investments still appear strong.
Dillard’s is still controlled by the Dillard family with Mr. William Dillard, II as the current Leader. Although it is a publicly-traded company, the Dillard’s name can draw investors for the REIT to gain various investors. There could be approximately 240 retail properties that can be transferred into the REIT via a sale-leaseback transaction. The NNN Investors of the REIT could benefit from the steady income from the triple net lease properties. Our NNN Commercial Real Estate Investors are actively seeking triple net lease properties with retail tenants. The Tenant, Dillard’s in this case would be responsible for the rent, all taxes, insurance, and maintenance expenses. We also wanted to report that Dillard’s formed an insurance company, which is a wholly-owned unit to help efficiently manage their investment risks.
Dillard’s, Inc. currently ranks among the Country’s largest fashion apparel, cosmetics and home furnishings retailers. This net lease property tenant has annual revenues which exceed $6.2 billion. Dillard’s is a Little Rock, Arkansas-based company that has been in business for over 70 years. Their retail stores are anchor-tenants at many Retail Shopping Centers. Most of these Retail Shopping Centers are class-A and class-B regional shopping malls positioned in eastern states. Dillard’s competes at many Retail Shopping Center Malls with the likes of Kohl’s, Macy’s, JC Penney, Nordstrom and Bloomingdale’s. Dillard’s retail stores can compete as they sell a various selection of merchandise and feature products from both national and exclusive brand sources.
Dillard’s commercial real estate portfolio currently consists of almost 300 stores. Dillard’s owns approximately 46.4 million square feet of retail space, with much of it in desirable retail locations. Some large shareholder at Target Corp. (TGT) had thought of a similar idea recently. A leader at Target thought to enter into commercial real-estate sale-leaseback deals whereas Target would dump the commercial land under its the retail stores, and end up with Ground Leases. Many NNN Commercial Real Estate Investors would favor these types of Ground Lease with Target however that deal is not in play. NNN Commercial Real Estate Investors might also look at Sears or JC Penney with a Sale-Leaseback and possibly absolute NNN Lease Investments or Ground Leases.
More history of these types of commercial real estate deals are when Steven Roth bought the bankrupt department store chain’s Alexander’s. The brilliant investor Steven Roth paid approximately $53 million for the deal and spun off its commercial real estate holdings into a REIT. That REIT is currently managed by the Vornado Realty Trust. Steven Roth had a very valuable asset attached in that deal and that was the Bloomberg Tower, in New York City. The Bloomberg Tower is a 1.4 million square-foot mixed-use property that is built on the site of a former Alexander’s store.
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