NNN sale-leaseback opp. - need help!

[Sam Malhot]

Hi, very new to CRE investment, but I have been getting up to speed quickly. Anyhow, ran into a potential opportunity for a NNN investment, but feeling very unsure about my analysis and what to make out of it. Therefore, I am posting it here for some advice.

A financial institution with ‘Aaa’ rating is looking to sell / leaseback their existing locations in my area. They are asking for offers based upon MAX 6.5% cap rate. In seller own words: Buyers are encouraged to submit offers based on cap rates that are significantly lower than 6.5% to ensure the competitiveness of their overall bid. Additional consideration will be given to those bids that allow for additional lease flexibility within the portfolio (lease termination rights, expansion rights, etc.)

One Sample property:
Building: 3420 sq. ft.
Lot: 32670 sq.ft.
Rent:
Year 1-10: $55,000 / Yr
Renewal terms: 4, 5 year options @ 15% Increase.

If you go with the seller directions, they are asking for $846,153 (6.5% cap) or $916,667 (6% cap)

My Concerns:
- Locked into long term lease (30 yr) with no rent increases for first 10 years, therefore no real appreciation potential for a long time.
- Most of the locations can be defined as second- or third-tier location (i.e., a block or so off the main retail drag). Most would be considered "location-challenged", in the sense that it can only accommodate a similar business and cannot be converted to a general retail-commercial space.
- Given my AGI (150k+), I believe I can’t take advantage of tax benefits, making it harder to justify the deal. Is this correct?

My questions:
- With NNN leases, is it as simple as it sounds, i.e. landlord does not have any expenses, so your Gross = NOI? In other words, the only exp is debt service?
- Based upon my understanding and a say 6% Cap, even with no expenses and 20% down ($183,333) the yearly payments alone one a $733,334 loan (6.5 %, 20Y) will be $65,610 making it $10,610 neg. cash flow. What do you think will be a fair price?
- I can dig more deeper and look for potential tax benefit, appreciation and equity buildup benefits, but at the end of the day it is –ve cashflow. Ho will you factor in those issues?

Sorry for the long post and lot of q’s. Thanks in advance for your help!

Sam