Sunday, November 25, 2007

Triple-Net Investment Opportunities Abound

I write a lot about my belief in the strength of multifamily real estate as an investment. But there there are a number of retail opportunities available for investors, as well. One reader wrote me over the weekend and asked about the kinds of companies that sign NNN, or Triple-Net, leases.

Here are a few examples of the kinds of companies that will sign long-term NNN leases:

-- Seattle-based coffee house giant Starbucks just announced full year 2007 results, which included a 21 percent increase in net revenue, 5 percent increase in comparable store sales, and earnings per share growth. The company plans to add 1,600 U.S. Stores in 2008.

-- TJX Sees Potential for 700 More U.S. Stores. The Framingham, Mass.-based The TJX Companies, Inc. , an off-price retailer of apparel and home accessories under banners TJ Maxx (851 stores), Marshalls (777 stores), Home Goods (287 stores), A.J. Wright (130 stores) and Bob's (34 stores) across the country, recently reported its third quarter fiscal 2008 results. Net sales increased 6%, comparable store sales increased 3% and net income increased 13% over the previous year. In the U.S., its TJ Maxx stores produced the best results. Some stores are stand-alone NNN opportunities, while others are in larger shopping malls.

-- Pet Supermarket has opened its largest store yet in Mirimar, Fla. The Miami-based Pet Supermarket, pet supply retailer with more than 100 stores nationwide, opened an 11,000 square feet superstore, significantly larger than the company's standard store format of 6,000 to 8,000 square feet. The store is a test concept for future openings. The company currently has stores in Tennessee, Alabama, California and Ohio, and intends continued growth.

I also receive many notices of investment opportunities for standalone buildings housing Advance Auto Parts and Walgreens pharmacies. Each of these companies typically signs long-term leases.

In my next post, I'll explain the concept of Triple Net leases, and their many hybrids.

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