National Retail Properties (NYSE: NNN) is a real property investment trust, or REIT, that, as the call implies, specializes in retail homes. But you won’t locate department stores or shopping centers in its portfolio — the organization invests in a single sort of property handiest.
All 2,969 of the properties in National Retail Properties’ portfolio are single-tenant (freestanding) retail houses. Think of corporations like vehicle washes, eating places, and convenience stores, just to name a few examples.
Unlike a few different leaders within the internet-hire space, National Retail Properties is a natural play on single-tenant retail. In different phrases, it’s the simplest asset kind you’ll find in its portfolio.
An approach designed for regular, growing profits
National Retail Property has additives to its approach that permit it to generate profits; this is fear-free and gradually growing in any kind of retail environment.
First, the business enterprise invests in freestanding homes occupied handiest by the aid of certain types of retail businesses. Generally, while you listen to about retail bankruptcies and keep closures, they usually affect businesses that sell complete retail-priced merchandise, promote discretionary goods, or things you could without difficulty purchase online for a lower fee.
National Retail Properties invests in retail groups that do not fit into any of those classes. Many sell nondiscretionary goods, inclusive of convenience stores, which make up 18% of the portfolio. Others are service-primarily based groups, which means businesses that cannot be conveniently duplicated online consisting including restaurants, car service centers, and fitness facilities. And some are bargain-oriented groups like warehouse golf equipment — these businesses provide offers better than what is often available online, and in case you’ve been to a Costco or Sam’s Club recently, you know this business version is not struggling.
In addition, honesty, all of National Retail Properties’ tenants sign triple-net rentals (this is where the enterprise’s “NNN” stock image comes from), which means that the tenant covers the charges of property taxes, building insurance, and maximum maintenance costs. In different phrases, the variable charges of owning an asset are largely taken care of. Plus, triple-net leases typically have lengthy (suppose 15 years or more) initial lease terms, with annual lease increases, or “escalators,” built in. Also, the organization has aneighty-eight-fivee % % renewal charge at the cease of these already lengthy lease phrases.
