Thomas H. Nolan Jr., Chairman and CEO of Spirit Realty Capital, Inc. (SRC), expects the net-lease REIT sector to continue growing at a strong rate, even as this segment has grown fivefold from $10 billion since 2012, he told The Wall Street Transcript in a recent interview.
“I anticipate, given the market dynamics that are occurring and the fact that so many companies are assessing whether to continue to hold real estate on their balance sheets, there will be substantial growth over the next several years. So for an industry that has been around almost 30 years, the net-lease sector under the spotlight of institutional ownership has only been around for a few. I think that opens up an opportunity to become one of the leaders in this space, and that’s what we intend to do,” he said.
Nolan says SRC has had predictable quarterly performance from an AFFO standpoint, and as investors continue their search for yield, he says Spirit Realty Capital could become a leader in the net-lease REIT industry and reap the rewards.
“The net-lease sector is going to become increasingly attractive. I think it’s attractive already, and that it’s going to be increasingly attractive when this inevitable hunt for yield marches on. With the 10-year Treasury continuing to hover around 2% and the spread between the types of properties that we are acquiring, which are in the mid-7% over the last 18 months, that’s over a 500-basis-point differential. I think people are going to look at that premium and realize that, one, it’s sustainable, and two, it’s very attractive,” he said.
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