Seeking advice on NNN or Absolute Net leaseback on Industrial

[Ethan Bruland]

I'm looking at an absolute net leaseback with what appears to be a thriving industrial company. Financials show consistent growth in revenue over the years. It's a 15 year lease back with 3 different options for additional 5 year terms after. Annual rent escalates at 2%/year. It's a huge investment compared to my SFR portfolio but at a 7% cap, it shows great returns down the road and would pretty much set us up for life after retirement. I have zero experience with NNN investments so would love any guidance or potential red flags to look for.

Ethan 

[Bennet Sebastian]

Hi @Ethan Bruland, a 15-year lease back plus options, at 7% cap and with a strong company sounds like a no brainer. But often times when deals are this good the lease rate is artificially inflated to get a higher sale price. Are the owners willing to give you a personal guarantee? Tell us more about the property, (type, age, size, price).  What is the going cost/sf for comparable properties in the market? What you don't want is a property that will be worth substantially less than you paid for it when your tenant leaves.