The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the 3rd quarter activity in the National Net Lease Market.

1. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q3 2016
Q2 2016 Q3 2016 Basis Point
Sector (Previous) (Current) Change
Retail 6.18% 6.10% -8
Office 7.25% 7.08% -17
Industrial 7.26% 7.14% -12
NUMBER OF PROPERTIES
ON THE MARKET
Q2 2016 Q3 2016 Percentage
Sector (Previous) (Current) Change
Retail 3,310 3,353 +1.3%
Office 395 408 +3.3%
Industrial 346 380 +9.8%
MEDIAN NATIONAL ASKING VS
CLOSED CAP RATE SPREAD
MARKET OVERVIEW
Cap rates in the third quarter of 2016 for the single tenant net lease
retail sector reached a new historic low rate of 6.10%. During the
same period, cap rates for the office and industrial sectors decreased
to 7.08% and 7.14% respectively. The overall net lease market
remains active with 1031 and private investors due to the passive
nature of the leases and attractiveness of relative investment returns
when compared to other asset classes.
The uncertainty of traditional investment asset classes coupled with
the stable yields generated by the single tenant sector has created
an abundance of investor demand for this sector. Despite a slight
rise in the supply of net lease properties, there is a lack of new
construction properties with long term leases. Accordingly, during the
third quarter cap rates for recently constructed properties tenanted
by McDonalds, DaVita and Advance Auto Parts compressed by 30,
25 and 15 basis points, respectively. This accounted for the greatest
retail tenant compression as noted in the cap rates by year built chart.
While newly constructed assets for certain tenants remain in high
demand and limited supply, the dollar store tenants continue to
expand and add an abundant supply of new construction to the
market. The dollar store sector remains to be one of the sectors with
increasing cap rates despite the current low cap rate environment
due to their large supply on the market. However, these assets
remain in demand with investors who have 1031 exchanges with
small equity requirements due to their low price points and long term
leases with creditworthy tenants.
The net lease market should remain active throughout the remainder
of the year, with the expectation that cap rates should hold steady
for the near term. The market will remain favorable to sellers as
investors continue to seek this asset class due to the passive nature
of the leases and institutional and fund investors attempt to reach
fund allocations by years end.
NATIONAL ASKING CAP RATES
Q2 2016 Q3 2016 Basis Point
Sector (Previous) (Current) Change
Retail 26 26 0
Office 30 39 +9
Industrial 28 35 +7

2. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q3 2016
SELECTED SINGLE TENANT SALES COMPARABLES
Sale
Date Sector Tenant City State Price
Price
Per SF
Cap
Rate
Lease Term
Remaining
Aug-16 Industrial Home Depot Tolleson AZ $48,000,000 $103 5.25% 14
Aug-16 Industrial Golden State Foods Brookfield IL $39,500,000 $267 6.60% 16
Sep-16 Industrial Famous Footwear Lebanon TN $32,800,000 $60 6.71% 15
Sep-16 Office Citrix Systems Fort Lauderdale FL $23,900,000 $200 8.30% 10
Sep-16 Retail BJ's Wholesale Club Maple Shade NJ $15,600,000 $142 7.13% 5
Aug-16 Office US Bank Milwaukee WI $14,000,000 $126 6.13% 10
Jul-16 Retail CVS Miami FL $12,500,000 $1,383 4.82% 25
Jul-16 Retail LA Fitness Glendale AZ $12,500,000 $271 6.21% 14
Jul-16 Retail Walmart Neighborhood Market Richmond VA $12,091,000 $294 5.40% 15
Jul-16 Retail Academy Sports Diberville MS $11,395,000 $181 6.39% 15
Aug-16 Retail Fresh Thyme Farmers Market Worthington OH $10,670,000 $377 6.91% 14
Aug-16 Retail CVS Phoenix AZ $10,466,000 $844 5.65% 19
Sep-16 Retail Wawa (GL) Marlton NJ $7,020,000 -- 4.46% 19
Aug-16 Retail Walgreens Raleigh NC $6,894,000 $505 5.40% 20
Aug-16 Retail Walgreens Ruston LA $6,500,000 $446 6.13% 16
Aug-16 Retail Natural Grocers Aurora CA $6,479,000 $429 6.20% 15
Jul-16 Retail Walgreens Columbia SC $5,772,160 $381 7.40% 6
NET LEASE CAP RATE TRENDS
Retail Office Industrial
6.15%
6.65%
7.15%
7.65%
8.15%
8.65%
Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016

3. www.bouldergroup.com
THE NET LEASE
MARKET REPORT
Q3 2016
© 2016. 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.
Tenant 2011-2016 2006-2010 2000-2005 Pre 2000
7-Eleven 4.70% 5.25% 5.55% 6.25%
Advance Auto Parts 5.75% 6.75% 7.20% 7.60%
AutoZone 5.05% 5.60% 6.00% N/A
Bank of America (GL) 4.40% 4.80% 5.15% 5.45%
Chase (GL) 4.30% 4.72% 4.90% 5.15%
CVS 5.00% 5.39% 5.85% 7.65%
DaVita 5.75% 6.43% 7.00% 8.15%
Dollar General 6.57% 7.51% 7.91% 8.61%
Family Dollar 6.40% 7.20% 7.85% 9.25%
FedEx 5.90% 6.50% 7.35% N/A
Fresenius 5.70% 6.45% 7.15% 8.05%
GSA 6.10% 6.65% N/A N/A
McDonald's (GL) 3.75% 4.35% 4.90% N/A
O'Reilly Auto Parts 5.50% 5.75% 5.95% 6.40%
Rite Aid 6.00% 6.90% 7.75% 8.70%
Walgreens 5.30% 5.85% 6.15% 6.75%
MEDIAN ASKING CAP RATES BY YEAR BUILT
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
Asher Wenig | Vice President
asher@bouldergroup.com
CONTRIBUTORS
Scott Harris | Analyst
scott@bouldergroup.com