Orion Real Estate Buys 12-Asset Net Lease Portfolio

Orion Real Estate Group has completed the nearly $50 million acquisition of a 12-property net lease retail portfolio comprising more than 94,000 square feet across three states and five major metropolitan markets.

JLL Capital Markets represented the seller, a South Florida-based family office that held the investment for a decade as an allocation of their fixed-income portfolio and procured the buyer. According to JLL, the seller has other investment opportunities for which to use the capital.

The portfolio consists of 11 single-tenant and one two-tenant properties, including bank branches, a fitness center, pharmacy, urgent care facility and quick service restaurant.

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The assets have 6.5 years of weighted average remaining lease term and nearly 70 percent of the tenants hold investment grade credit ratings. The properties are positioned in major metropolitan areas throughout Florida, Texas and Illinois.

“In this portfolio, because not all the leases are rolling at the same time, the staggered expirations and minimal landlord expense responsibilities created a rare opportunity to control a portfolio of mid-term net lease assets with a combination of strong yield, credit and intrinsic real estate,” Director Alex Sharrin told Commercial Property Executive.

“In a downside scenario, wherein your tenants do not renew, the staggered lease expirations help the owner because it doesn’t have to carry costs across multiple assets. It also helps with the compound annual growth rate and rent growth throughout the hold period.”

Positive leverage

Sharrin told CPE that this NNN portfolio was offered at a cap rate above where one could finance the transaction in today’s capital markets (positive leverage).

“There are not a lot of quality NNN portfolios of scale that offer positive leverage today,” he said.

Cap rates in the single-tenant net lease sector increased for the ninth consecutive quarter within all three sectors in the second quarter of 2024, CPE reported.

JLL’s Investment Sales and Advisory team representing the seller was led by Sharrin, senior director Jeff Cicurel, and associates Eric Osika and Noel O’Donnell.