The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the activity in the National Net Lease Big Box Market.

1. www.bouldergroup.com
THE NET LEASE
BIG BOX REPORT
FEBRUARY 2015
Q4 2013 Q4 2014 Basis Point
(Previous) (Current) Change
7.10% 6.71% -39
BIG BOX VS. NET LEASE SECTOR
MEDIAN ASKING CAP RATE
Q4 2013 Q4 2014
Sector (Previous) (Current)
Big Box 7.10% 6.71%
Retail Net Lease Market 6.85% 6.50%
Big Box Discount (bps) 25 21
BIG BOX MEDIAN ASKING CAP RATE
BY CREDIT RATING
MARKET OVERVIEW
Cap rates in the single tenant net leased big box sector compressed
from the fourth quarter of 2013 to the fourth quarter of 2014 by 39
basis points. The compression experienced by the big box sector
was greater than the overall net lease retail sector, which decreased
35 basis points over the same time period. With net lease retail cap
rates at their historic low levels, investors have been able to achieve
higher yields in the net lease big box sector as net lease big box
properties were priced at a 21 basis point discount to the entire net
lease retail market in the fourth quarter of 2014. The primary reason
for the cap rate discount available in the big box sector can be
attributed to the re-leasing risk associated with the square footage
of the properties and the significantly higher absolute price point
when compared to the net lease retail market. Net lease big box
transaction velocity was down 47% in 2014 when compared to 2013
primarily due to a lack of new free standing construction as tenants
such as Hobby Lobby, Ross and T.J.Maxx have been able to backfill
second generation or inline space at low rents.
Big box properties tenanted by investment grade companies remain
at the forefront of investor demand. However, the entire big box
sector was made up of only 43% investment grade tenants in the
fourth quarter of 2014. Big box properties tenanted by investment
grade companies commanded a 100 basis point premium versus
non-investment grade companies. However with retail cap rates at
historic lows, some investors have looked to acquire higher yielding
non-investment grade properties to boost portfolio returns. In 2013,
big box transactions were dominated by REITs which accounted for
69% of all sales. In 2014, there was a shift in buyer type within
the big box sector. Private buyers accounted 47% of the big box
transaction that occurred in 2014 according to Real CapitalAnalytics,
a 104% increase when compared to 2013. Private buyers continue
to dominate the net lease market in the low cap rate environment as
institutions cannot typically pay the cap rate premiums due to yield
restrictions.
The single tenant net leased big box sector will remain active as
both individual and institutional investors seek net leased properties
with higher yields. However, with low availability of net lease big box
properties market participant expectations are for cap rates to hold
steady or decline slightly in 2015.
BIG BOX ASKING CAP RATE COMPARISON
Investment Grade Non-Investment Grade Basis Point
Cap Rate Cap Rate Spread
6.00% 7.00% 100
BIG BOX PROPERTIES MEDIAN
ASKING PRICE
Average Average Price
Sector Price Per SF
Investment Grade $6,519,479 $189
Non-Investment Grade $6,232,500 $139

2. www.bouldergroup.com
THE NET LEASE
BIG BOX REPORT
FEBRUARY 2015
BIG BOX MEDIAN ASKING CAP RATE BY REGION
MEDIAN ASKING CAP RATES
BY SQUARE FOOTAGE
MEDIAN ASKING CAP RATE BY
LEASE TERM REMAINING
Percentage
Sector SF Range Cap Rate of Market
Junior Big Box 20,000 - 40,000 6.78% 40%
Mid Box 40,000 - 80,000 6.72% 45%
Large Format Over 80,000 6.48% 15%
Years Investment Non-Investment
Remaining Grade Grade
16-20 5.33% 6.40%
11-15 5.77% 6.57%
6-10 5.90% 7.02%
5 & Under 7.32% 8.03%
WEST
MOUNTAIN
MIDWEST
SOUTH
NORTHEAST
NORTHEAST
SOUTH
MIDWEST
MOUNTAIN
WEST
6.70%
6.55%
6.63%
7.12%
5.75%

3. www.bouldergroup.com
THE NET LEASE
BIG BOX REPORT
FEBRUARY 2015
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
Jordan Kaufman | Vice President
jordan@bouldergroup.com
© 2015. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the information
and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose nor under any
circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly disclaims any liability
arising from the use of such information. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced, retransmitted or distributed without the express
written consent of The Boulder Group.
Zach Wright | Research Analyst
zach@bouldergroup.com
CONTRIBUTORS
Sale Date Tenant City State Price Price/SF Cap Rate Lease Term Remaining
Oct-14 Bass Pro Shops Dania FL $28,130,000 $170 6.25% 8
Oct-14 Lowe's Shippensburg PA $24,366,667 $142 6.05% 16
Oct-14 Gander Mountain Waukesha WI $18,275,353 $294 8.35% 8
Sep-14 Lowe's (GL) Silverdale WA $13,800,000 N/A 4.85% 14
Oct-14 LA Fitness Goodyear AZ $12,000,000 $282 6.80% 15
Nov-14 Petco Denver CO $11,350,000 $492 6.20% 10
Nov-14 LA Fitness Redlands CA $9,150,000 $223 8.00% 5
Oct-14 Garden Ridge Hilliard OH $7,150,000 $55 8.56% 7
Oct-14 Lowe's Columbus OH $6,411,500 $51 8.50% 5
Oct-14 Bed Bath & Beyond Mishawaka IN $5,700,000 $150 7.70% 8
SELECTED SINGLE TENANT BIG BOX CLOSED TRANSACTIONS IN 2014
COMPANY COMPARISON
Total Number Credit Market
Tenant of Stores Rating Cap
24 Hour Fitness 400+ B Private
Academy Sports 180+ Not Rated Private
Bed Bath & Beyond 1,000+ A- $13 B
Best Buy 1,055 BB $12 B
BJ's Wholesale 200 B- Private
Dick's Sporting Goods 558 Not Rated $6 B
Gander Mountain 152 Not Rated Private
Hobby Lobby 572 Not Rated Private
Kmart 1,077 CCC+ $3 B
Kohl's 1,158 BBB $12 B
Kroger 2,424 BBB $32 B
La Fitness 600+ Not Rated Private
Lowe's 1,750 A- $66 B
Petco 1,300 B Private
Ross 1,173 A- $19 B
Shopko 332 Not Rated Private
Sports Authority 460+ B- Private
Sprouts Farmers Market 150+ BB- $5 B
Staples 2,000+ BBB- $11 B
The Home Depot 2,248 A $137 B
Wal-Mart 11,00+ AA $280 B
Whole Foods 387 BBB- $18 B