I hope you and yours had a wonderful Easter weekend! Another work week has passed and much has remained the same, but there is sign of some changes ahead. Remote offices remain, there are plenty of unknowns in the markets, and we all have continued hope and optimism.
Some Observations:
We’ve seen an uptick in properties hitting the market, as well as inquiries made on our listings. Noticeably on both fronts, from the week prior.
The government extended deadlines on 1031’s to July 15th. Our understanding of the impact: We believe if your 45-day ID period or 180-day exchange period ends between April 1st – July 15th, either may be pushed as far forward as July 15th. It felt like a nice move to give 1031 groups a little more flexibility. I recommend consulting with your exchange specialist on this new legislation and how it may impact you.
Office Space
While retail is our specialty, we work with other product types too, including office. This week, I spoke to a number of industry stakeholders about office deals that are evolving. Companies reevaluated their needs in a post Covid-19 world. Work from home policies have taken on a whole new meaning, and I don’t think companies will be ill-prepared again. Private office suites may come back versus co-working/open environments. HVAC systems will implement cleaner/fresher air and attempt to isolate workspaces better than ever before. For our own office situation @ Brisky, I am researching and evaluating what we can do to make our long term plan a better one.
April Rents & Tenants
I had a number of conversations with institutions / landlords this week regarding April rent collections or lack thereof. Unfortunately, they are faced with the challenge of trying to figure out which tenants need relief and which ones just want relief. There is no perfect answer here, but middle ground solutions with constant communication by all stakeholders seem to be the best approach we can take (Tenant-Landlords-Lenders-Vendors). Institutionally, I believe groups that have invested heaviest in a robust asset management team will be better equipped to come out of this; we shall see how it all plays out.
Which brands are doing well right now?
I challenged our team to be consumers this week and take notice of companies making good strides. Not the obvious ones: Grocery, Walmart, Amazon, etc., but others that might not be as obvious and I would challenge you all to do the same.
Some things to look out for in companies that are making good strides are groups who have shifted to better customer pickup models, groups who have implemented a better/more streamlined web business, groups who have been especially fair to their employees, groups instituting safer and better delivery policies, groups implementing virtual experiences, etc. We will come back to this again next week.
Deal Flow:
Dollar General
More Dollar Generals for us. Additional units were put under contract this week, and we have a nice selection still available. A bulk of our buyers are 1031, but we do have some others who are just looking for a stable investment. The price points on DG’s are smaller than most in the NNN world, so that has been attractive for investors as well and cap rates on DG still feel fairly stable.
Self-Storage
I’ve seen an uptick in inquiries from self-storage developers. This has been a pretty popular space, but I do think the growth will continue. I am curious about rent collections, delinquencies and health/safety measures at these locations. Will continue to research and monitor.
Drugstores
We’ve also seen increased activity in this space. We have Walgreens, CVS and Rite Aid buyers out looking for long, mid and short-term deals. We have added a number of off-market opportunities to our pipeline in recent days. We’ll see if investors grab some of them soon.
Giving Back
I feel it’s really important to remember those less fortunate during these times. While we must keep our families safe and healthy, I’m trying to do a better job of reaching out and contributing to others too. Here’s a nice article out there with some ideas:
Wishing you all a great week forward!
Brian
