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.
Net Lease Program Highlights:
Terms:
“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.
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.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com
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.
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:
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:
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).
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.
To learn more or get a quote, contact us at lending@peachtreegroup.com.
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.
Net Lease Program Highlights:
Terms:
“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.
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.
Contact:
Charles Talbert
678-823-7683
ctalbert@peachtreegroup.com
In the realm of commercial real estate, single tenant net lease financing is an effective tool for developers and investors looking to fund new construction projects. This financing method, particularly in the form of a triple net lease, offers unique advantages and considerations that can make a construction venture pencil. Let's delve into the details of single tenant net lease financing and its relevance to construction projects.
There is a void in the market between the expansion plans of tenants and the availability of financing. Meanwhile, banks have pulled back on lending due to their outstanding commercial real estate exposure and liquidity constraints.
According to an article in Forbes on trends reshaping retail: "In December 2023, the retail vacancy rate across the U.S. was 4.6%, the lowest level recorded by the CoStar Group since they began tracking it in 2007. On the supply side, construction started on just 46 million square feet of retail space in 2023, compared to 82 million in 2022.This decline is due to increased financing costs, reduced capital availability, and still-elevated input costs such as land and materials."
Single tenant net lease financing, often referred to as a triple net (NNN) lease, is a type of arrangement commonly used in commercial real estate. Under this lease structure, a tenant agrees to pay not only the base rent but also the property taxes, insurance, and maintenance costs associated with the property. This type of lease is typically long-term and stable, making it attractive for financing new construction projects.
For developers seeking financing for new construction, securing a single tenant with a triple net lease can be instrumental in lowering borrowing costs. Here’s why:
1. Pre-Lease Agreements: Developers may negotiate a lease agreement with a tenant even before construction begins. This lease commitment provides assurance to lenders and investors, mitigating risks associated with vacancy post-construction.
2. Stable Cash Flow: The predictability of rental income from a single tenant under a triple net lease reduces uncertainty for lenders, making it easier to secure financing at more favorable terms.
3. Lower Risk Profile: Lenders often view single tenant net lease properties as lower risk due to the long-term lease commitments and the tenant’s responsibility for property expenses.
While single tenant net lease financing can be advantageous for construction projects, there’s more to the underwriting of the loan than just having a triple net lease. Lenders will also assess the following:
1. Creditworthiness of Tenant: The financial strength and creditworthiness of the tenant are crucial. Lenders assess the tenant’s ability to fulfill lease obligations over the long term.
2. Lease Terms and Length: Longer lease terms are generally more favorable for financing. Lenders prefer leases with stable, long-term income streams.
3. Property Location and Type: The location and type of property (e.g., retail, industrial, office) can impact financing terms.
4. Exit Strategy: Developers should have a clear exit strategy in place, especially considering the long-term nature of single tenant net leases.
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.
Single tenant net lease financing, particularly through triple net leases, is a valuable tool for financing construction projects in commercial real estate. By securing a lease commitment from a creditworthy tenant, developers can leverage stable income streams to obtain financing on favorable terms at lower interest rates.
As a nationwide balance-sheet lender, Peachtree Group is ready to facilitate your business plan and get your deal done. Learn more about Peachtree Group’s triple net lease financing terms and get a quote.
Need immediate assistance? Contact Jordan Arzi, lending@peachtreegroup.com
.jpg)