Mr. Ralston: Commercial Net Lease Realty was actually formed as Golden Corral Realty Corp. in 1984, originally designed as a finance vehicle for Golden Corral restaurants. It was a company with a $12 million capitalization that owned 27 Golden Corral restaurants when our management team took over control at the end of 1992. So we've grown the company over that period of time to our present levels. The focus of our company is real estate. We are real estate practitioners, and we view real estate as the basic fundamental of our business. The company today has a total market capitalization of about $800 million. Our focus is freestanding stores that are typically between 7,500 and 100,000 square feet that would have an acquisition/development cost of $1-$10 million. We are very disciplined by diversification, so that the portfolio today consists of 240 properties geographically diversified across 36 states to 56 national or regional retail tenants in 25 different lines of trade. We have included as part of our investment philosophy a foundation block of long-term net leases. It is our belief that leases in excess of a decade in duration bridge real estate and economic cycles and provide enhanced cash flow stability. The company today has a 13- year-plus weighted-average lease term. Freestanding retail stores with net leases are very desirable for tenants and, we think, have a remarkable degree of fungibility as a result. That's because of some basic characteristics: they are high-visibility locations that have easy access; they typically have unique location and linkage attributes; and, the retail tenants appreciate the opportunity to have total control of the store and the site, to be able to establish their own hours of operation, their own standards of maintenance, etc., and pay those costs on a direct basis. There is also increased flexibility for reuse of the facilities, which, we think, is a unique characteristic of the company. We are, in many respects, classic real estate analysts in that we believe value is in the land and that land represents enduring value. In fact, if you look at the balance sheet, about 40% of our investment is actually land ' and that is most appropriate for a retail company, since the value of the site, the characteristics of the surrounding trade area, are directly attributable to the cost and price of the land and the ability to drive successful sales through that particular location. One of the other unique characteristics of freestanding net-lease retail properties is that they are pre-leased. There's no speculative development done; building is in response to direct demand from retail companies. That means that when you do experience vacancies in the market, it is typically much easier to absorb that space. This particular product type experiences a unique level of equilibrium.
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