GIC’s Massive Net Lease Bet Is Not Easily Replicated

September 22, 2022 - SLB Capital Advisors provided perspectives to PERE regarding GIC’s announced acquisition of STORE Capital

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GIC’s Massive Net Lease Bet Is Not Easily Replicated

September 22, 2022 – SLB Capital Advisors provided perspectives to PERE regarding GIC’s announced acquisition of STORE Capital

  • As Scott Merkle, managing partner at New York-based real estate advisory firm SLB Capital Advisors, told us this week: “This is a big splash in the net lease sector and really validates the sector. We have seen a number of new entrants in this market over the past two years, but they’re not capital providers or investors.”
  • Aside from GIC, however, few other large investors have struck blockbuster deals in the net lease space. Instead, those institutions have opted to form sizable joint ventures with operators in other real estate sectors where they can achieve higher, typically value-add returns. Net-lease buyers, however, typically are acquiring stabilized assets with a reliable cashflow stream. Investors view the sector as being “a little bit sleepier,” Merkle explains. “It’s not a high-octane asset class.”
  • . . . Given current market conditions, we do not expect other big-name investors to follow in GIC’s footsteps for the time being. Institutions that previously had considered large-scale investments in the sector are delaying those plans until the interest rate environment stabilizes so they can more reliably anticipate what their costs of capital will be, according to Merkle.
  • Read the full article here