JLL Tapped to Market 143-Branch SunTrust Net Lease Portfolio

Inland American REIT wants to sell its 143-branch SunTrust Net Lease Portfolio, and the real estate company has selected Jones Lang LaSalle's Capital Markets Group to find a buyer for the group of assets, which is valued at more than $275 million.

Inland American REIT wants to sell its 143-branch SunTrust Net Lease Portfolio, and the real estate company has selected Jones Lang LaSalle’s Capital Markets Group to find a buyer for the group of assets, which is valued at more than $275 million.

The 715,000-square-foot collection of SunTrust Bank retail branches consists of eight sub-portfolios subject to eight master leases in strong banking markets throughout in the Mid-Atlantic and Southeastern U.S., with 40 percent of the portfolio located in Florida. While there are only five years remaining on the terms, an option structure commits SunTrust Bank to renew for an additional 10 years.

It’s a package that practically any investor would love in the current market. “It’s unusual to have something like this in the market today,” Randy Blankstein, president of The Boulder Group, told Commercial Property Executive. “It’s the sweet spot of what people are looking for–investment grade tenants, long-term leases–so I think it will be well received in the market because there’s a lot of pent-up equity.”

Inland has its reasons for letting go of the portfolio. “The disposition of these net lease retail assets corresponds to Inland American’s long-term portfolio strategy to move into additional multi-tenant, necessity-based retail properties,” Jeff Manno, vice president of transactions of Inland American, said in a prepared statement.

Inland’s timing appears to be just right. “In terms of the general net lease market, it is without a doubt a seller’s market at this point in time,” Winston Orzechowski, research director with Calkain Cos., told CPE. “What we’re looking at right now is there’s a huge amount of demand and that’s pressing cap rates very, very low and this is being triggered by a few different things. On the one hand, while we’re now beginning to see new development, we really hadn’t had much in the last few years so essentially there’s been a dwindling pool of assets. Couple this with the fact that financing is becoming much easier. Credit is generally more available than it was a few years ago and then you tie that in with the fact that interest rates are still very, very low, so it’s quite easy at this point in time to raise the necessary capital to invest in these investments.”