ATLANTA (June 20, 2024) – Peachtree Group (Peachtree) has expanded its financing program to include net lease retail, medical and industrial properties. The program provides up to 100% loan to cost construction financing for these asset classes, effectively addressing a critical gap in the current commercial real estate market.

The commercial real estate market is currently experiencing a void between tenant expansion plans and financing availability. Developers need alternative financing solutions, as banks have pulled back on lending due to exposure and liquidity constraints.

“Peachtree’s comprehensive financing offerings come at a critical time, as the retail vacancy rate in the U.S. reached a historic low of 4.6% in December 2023, while construction starts significantly declined due to increased financing costs and reduced capital availability,” said Daniel Siegal, Peachtree’s principal and president, CRE.

Net lease financing requires a tenant to pay base rent along with property taxes, insurance, and maintenance costs. This long-term and stable arrangement makes it highly suitable for financing new construction projects. Triple net leases, in particular, enhance this method's value in commercial real estate. By securing lease commitments from creditworthy tenants, developers can leverage stable income streams to secure favorable financing terms.

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Net Lease Program Highlights:

• Flexible Financing Options: Multiple and single net lease financing.
• Innovative Solutions: Flexible capital to support complex deals.
• In-House Loan Servicing: Dedicated servicing for a streamlined process.

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Terms:

• Interest Only: Payment options to ease cash flow management.
• High Loan-to-Value: Up to 80% of finished value.
• Comprehensive Loan-to-Cost: Up to 100% LTC.

“As a nationwide balance-sheet lender, Peachtree Group offers competitive terms, in-house loan servicing, and flexible capital to handle a wide array of projects. Our net lease financing is designed to provide the flexibility and support needed for successful project execution, no matter how complex the deal,” said Siegel.

Through various programs, Peachtree provides full-stack debt capital solutions to qualified commercial real estate owners across all sectors throughout the U.S.

For more information about Peachtree Group’s Triple Net Lease financing and how it can benefit your business, please visit our website at www.peachtreegroup.com/credit.

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About Peachtree Group
Peachtree Group is a vertically integrated investment management firm specializing in identifying and capitalizing on opportunities in dislocated markets, anchored by commercial real estate. Today, the company manages billions in capital across acquisitions, development and lending, augmented by services designed to protect, support and grow its investments. For more information, visit www.peachtreegroup.com.

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Contact:

Charles Talbert                                                                                                  

678-823-7683                                                                                                    

ctalbert@peachtreegroup.com

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Triple net lease (NNN) financing has emerged as a pivotal trend in the retail sector, offering a unique blend of stability and flexibility for investors and developers. As commercial real estate continues to evolve, NNN leases provide an attractive model where tenants assume responsibility for property taxes, insurance, and maintenance, significantly reducing financial risk for landlords. This arrangement not only ensures a steady income stream but also aligns with the growing demand for scalable and sustainable building projects.

The latest trends in NNN lease financing reflect a shift towards more innovative financing structures, driven by a need for greater efficiency and adaptability in an ever-changing market landscape. Below are three trends Peachtree is seeing in the marketplace, as well as in our deal flow.

Supply and Demand Imbalance

As of Q1 2024, single-tenant retail development volume remained low. Rolling four-quarter completions totaled only 19.5 million square feet, which is 68% of the 10-year average (CBRE).

National tenants with strong credit have detailed expansion plans to grow their store fleets:

 
• 7-Eleven (A-rated credit) plans to add 7,000 stores over the upcoming years.
 
• Chipotle (strong private credit) plans to add 300 stores in 2024.
 
• Tractor Supply Company (BBB credit) plans to add 70 stores in 2024 and 90+ in the following years.
 

Flexibility in Lease Terms

Tenants are becoming more flexible with their lease terms in this inflationary and high-interest rate environment to help encourage development and provide buyers with more attractive assets. For example:

• Starbucks has increased the primary term on some build-to-suit leases from 10 to 15 years.
• Dollar General, which traditionally had a flat lease structure, has begun incorporating 5% rent bumps in their primary term.

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Preference for Small Spaces

A significant trend in the retail sector is the preference for small spaces under 2,500 square feet, which make up over two-thirds of executed leases. Consequently, quick-service and fast-casual restaurants, which typically fit within this size range, have reported nearly 2,000 potential openings in 2024. This includes popular chains such as McDonald's, Chipotle, and Dutch Bros. (JLL).

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What we are Seeing at Peachtree

Peachtree Group funds muti- and single net lease deals in retail, medical and industrial. Peachtree is seeing a variety of projects across the spectrum, from standalone quick service restaurants to grocery anchored centers. Currently, our team is favoring deals with experienced developers and strong national tenants.

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Why Peachtree?‍

• Flexible Financing Options: Multiple and single net lease financing across retail, industrial, and medical
• Innovative Solutions: Flexible capital to support complex deals.
• In-House Loan Servicing: Dedicated servicing for a streamlined process.

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To learn more or get a quote, contact us at lending@peachtreegroup.com.