The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the 1st quarter activity in the National Net Lease Market.

1. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q1 2015
Q4 2014 Q1 2015 Basis Point
Sector (Previous) (Current) Change
Retail 6.50% 6.40% -10
Office 7.31% 7.35% +4
Industrial 8.03% 7.70% -33
NUMBER OF PROPERTIES
ON THE MARKET
Q4 2014 Q1 2015 Percentage
Sector (Previous) (Current) Change
Retail 2,964 2742 -7.5%
Office 300 312 +4.0%
Industrial 292 307 +5.1%
MEDIAN NATIONAL ASKING VS
CLOSED CAP RATE SPREAD
MARKET OVERVIEW
Cap rates in the first quarter of 2015 for the single tenant net lease
retail sector reached a new historic low of 6.40%. After holding steady
for three straight quarters, cap rates for net lease retail properties
declined by 10 basis points. During this period, cap rates for the
net lease industrial sector compressed by 33 basis points to 7.70%,
while net lease office cap rates rose slightly to 7.35%. Retail assets
continue to command the lowest cap rates in the net lease sector due
to private and 1031 investor’s demand for this asset class. Private
and 1031 investors prefer retail over office and industrial due to their
familiarity with the tenants, typical long initial lease terms, passive
triple net lease structures and lower price points. Industrial assets
have gained favor among investors recently as illustrated by the
33 basis point cap rate decline in the first quarter. Investors have
a renewed faith in the industrial segment as the industrial market
continues to show positive absorption, escalating rental rates and an
increase in construction nationwide.
Retail assets remain at the forefront of investor demand in the net
lease sector. The 1031 exchange investor will continue to dominate
the net lease market as they can pay a premium over institutions
due to their tax consequences and lower personal return thresholds.
Additionally, as apartment owners take advantage of record pricing in
the multifamily sector, new net lease investors have emerged. Retirees
looking to leave the management intensive nature of multifamily have
become increasingly more active in the net lease sector due to the
passive nature of these investments. The increasing pool of capital
from first-time net lease investors has created strong competition
amongst buyers for net lease assets leading to the decrease in cap
rates seen in the retail and industrial sectors.
As limited opportunities exist for long term leased properties to
investment grade tenants when compared to the investor demand,
theseassetsarecommandingthehighestprices.Recentlyconstructed
Walgreens, CVS and Family Dollar properties experienced cap rate
compression of 25, 12 and 25 basis points respectively in the first
quarter.
The net lease market should remain active throughout 2015 as equity
continues to enter the commercial real estate sector. Investors will be
carefully monitoring the capital markets for potential rises in interest
rates and subsequent softening in asset pricing. Sellers will continue
to aggressively price assets in attempt to achieve favorable cap rates
in sale transactions; however the expectation is that cap rates should
remain relatively stable in the upcoming quarters.
NATIONAL ASKING CAP RATES
Q4 2014 Q1 2015 Basis Point
Sector (Previous) (Current) Change
Retail 21 19 -2
Office 29 35 +6
Industrial 45 39 -6

2. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q1 2015
SELECTED SINGLE TENANT SALES COMPARABLES
Sale
Date Sector Tenant City State Price
Price
Per SF
Cap
Rate
Lease Term
Remaining
Feb-15 Retail BJ's Wholesale Tampa FL $16,900,000 $141 6.83% 12
Jan-15 Medical Office Healthsouth Fredericksburg VA $16,529,439 $390 6.64% 8
Jan-15 Retail Walgreens Huntington Beach CA $16,000,000 $1,162 5.13% 21
Mar-15 Retail Kohl's Round Lake Beach IL $12,700,000 $146 5.78% 10
Jan-15 Retail Hobby Lobby Jacksonville NC $7,900,000 $143 6.54% 15
Feb-15 Retail TD Bank Jamaica NY $7,500,000 $1,304 4.84% 10
Jan-15 Retail Walgreens Greeley CO $7,125,000 $483 5.54% 15
Mar-15 Retail Chipotle Brooklyn NY $5,700,000 $1,274 5.26% 14
Feb-15 Retail CVS Weeki Wachee FL $5,100,000 $467 5.20% 25
Jan-15 Retail Tractor Supply Harrisburg PA $4,926,075 $227 6.24% 11
Jan-15 Industrial HVAC Supply, Inc. Denver CO $4,575,000 $78 6.73% 14
Feb-15 Retail Walgreens Milford OH $4,550,000 $312 6.18% 14
Jan-15 Industrial Structus Building Technologies Bend OR $4,500,000 $87 6.67% 7
Feb-15 Retail Bank of America Staten Island NY $4,100,000 $1,108 5.10% 20
NET LEASE CAP RATE TRENDS
Retail Office Industrial
6.25%
6.75%
7.25%
7.75%
8.25%
8.75%
Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015

3. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q1 2015
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@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
Tenant 2011-2015 2006-2010 2000-2005 Pre 2000
7-Eleven 5.00% 5.25% 5.70% 6.10%
Advance Auto Parts 6.00% 6.50% 7.15% 7.75%
AutoZone 5.00% 5.26% 6.00% 6.35%
Bank of America (GL) 4.00% 4.74% 4.95% 5.90%
Chase (GL) 4.00% 4.35% 4.70% 4.70%
CVS 5.13% 5.60% 5.80% 6.90%
DaVita 5.80% 7.00% 7.65% 8.00%
Dollar General 6.50% 7.45% 7.95% 9.50%
Family Dollar 7.00% 7.75% 8.00% 9.61%
FedEx 6.25% 6.50% 8.00% 9.36%
Fresenius 6.00% 7.01% 7.72% 9.75%
GSA 7.40% 7.76% 8.40% 9.40%
McDonald's (GL) 3.80% 4.20% 4.48% 4.88%
O'Reilly Auto Parts 5.75% 5.93% 6.50% 7.00%
PNC (GL) 4.30% N/A 5.80% 6.20%
Rite Aid 6.00% 6.60% 7.00% 8.13%
Walgreens 5.00% 5.50% 5.85% 7.25%
Wells Fargo (GL) N/A 4.40% 4.85% 5.00%
MEDIAN ASKING CAP RATES BY YEAR BUILT